I have a friend looking for new homeowners insurance. She is changing from a major insurer to a less well known insurer, but in my opinion a better insurer. She then asked me to review the policies and explain the differences. So, I did.
Her current policy has your standard coverages - A, B, C and D. A is the house, B is the other structures, C is the personal property and D is the loss of use. I have written about these coverages before.
Her new policy has a single limit. A, B, C and D are combined into one huge limit. In this case, her single limit is $100,000 more than the current A through D coverages. Why does this matter? For a few reasons:
- She is getting more coverage for less premium;
- She can use her coverage in any way she sees fit. So, if she has a total loss and it only costs $300,000 to rebuild her home, she can use the rest of it to replace her personal property or rent a home. She does not have to worry about using one limit up and having extra money in another limit;
- She doesn't have to worry about tweaking (or adjusting) her limit every few months. She has more than enough coverage now.
If you are looking for new homeowners insurance, ask your agent about a single limit policy.