Louisianans know: preparation is key for hurricane season.
What do you think about when preparing for a hurricane? Placing lawn furniture in the garage? Filling up the bathtub? Locating and fueling your oil lamps? Those are all good steps to take, but you should also be thinking about the big picture. Another important aspect of hurricane preparation is properly covering your dwelling and personal property with homeowners insurance.
In order to find out if your insurance policies adequately reflect your needs, learn the difference between Replacement Cost and Actual Cash Value.
Replacement Cost Value
Replacement Cost Value (RCV) policies cover the cost of replacing the item.
RCV policies are important for items that may depreciate in value. For example, your home may have a fifteen-year-old roof. If you lose your roof during a hurricane, an RCV policy will pay for the cost of a new roof, not the depreciated value of the fifteen-year-old roof.
Actual Cash Value
Actual Cash Value (ACV) policies have lower premiums then RCV. ACV will include consideration of fair market value, age and condition of the item in question at the time of the loss. For example, if you purchased a computer five years ago for $2,500, an ACV policy will cover the current market value of that exact computer model, not the cost of a brand new computer.
Dwelling and Other Structures
Homeowners insurance from Louisiana Farm Bureau insurance covers your dwelling and other structures on your property on a Replacement Cost Value basis.
During a hurricane, this policy covers damage to your home by wind and hail.
However, there is a water damage exclusion in the policy. The policy will not cover flood damages to dwellings, other structures, or personal property from flood water, surface water, waves, tidal water, overflow of body of water, or spray. For coverage from water damage, you should purchase a flood insurance policy.
Under our homeowners insurance policy, personal property is covered on an actual cash value basis. However, if you would like replacement cost value for your personal property, you can purchase an additional endorsement.
The extra personal property endorsement does not cover the replacement cost of certain items such as antiques, fine art, paintings, memorabilia, souvenirs, collectors items, etc. Those types of items would need to be covered by a separate policy than your homeowners policy—Personal Articles insurance.
Whether you live on a flood plain or not, we highly recommend that all Louisianans consider Flood insurance. A flood policy covers the replacement cost of your dwelling (up to $250,000) and the actual cost of your personal property. There is no replacement cost policy for items due to flooding. Take care to store these valuables with potential flooding in mind.
Contact Louisiana Farm Bureau Insurance
To find out the replacement cost and actual cash value of your personal property, start an inventory of what you own. Then, get in touch with a Louisiana Farm Bureau insurance agent to discuss getting coverage that is right for you. Find a local agent in your parish to learn more.