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Building Insurance Quotes - How To Compare Building Insurance Quotes

coverage earthquake damage limit

Building insurance provides financial protection for the significant investment associated with real property ownership. Whether insuring a home or a business building, owners should take care to compare building insurance quotes carefully since not all insurance policies are identical. Slight differences in coverage definitions, exclusions, or terms and conditions can have a significant impact on the level of coverage.

Check Quotes for Building Insurance Limits and Coverage Endorsements.

At the center of building insurance is the limit established for the primary structure. This amount should represent the total amount of money a building owner should expect to receive if the building were to be completely destroyed in an accident or natural disaster. When comparing building insurance quotes, verify that the building limit on the quote is sufficient to cover the cost to replace the building as well as any other optional endorsements offered which might enhance the coverage.

How Much Insurance Is Enough to Replace a Building?

Unfortunately, it is often difficult to know exactly how much it will cost to rebuild a building, especially after a major disaster. Many homeowners’ insurance companies offer endorsements for an additional premium which add an additional amount (usually 25%) to the building limit, if necessary. Some companies even write a “Guaranteed Replacement Cost” policy which will pay the entire cost to rebuild the structure even if the cost is higher than policy limits.

During the insurance application process, insurance companies use sophisticated replacement cost estimation software to estimate the limit required to rebuild based on local construction costs and specific details of the building. It is usually a requirement that building owners have at least the recommended limit in order to qualify for additional coverage enhancements.

What Loss Settlement Terms and Conditions Are Offered in the Quote?

Most building insurance quotes are offered with a “Replacement Cost Valuation” agreement. There are times, however, when an insurance company may not be willing to offer replacement cost valuation. In some situations, a quote may be offered with “Actual Cash Value” or “ACV” valuation. Actual cash value represents the cost to repair or rebuild a building less deductions for depreciation.

Common Exclusions and Limitations in Building Insurance

There are several common exclusions in building insurance which just can’t reasonably be included such as flood, mold damage, insect or vermin damage, and wear and tear. Other policy exclusions or limitations that building owners should consider are coverage for wind, earthquake, and backup of sewers or drains.

Compare Wind Deductibles in Insurance Quotes.

Many insurance companies impose a higher deductible for wind damage, 10% to 15%, than is imposed for all other causes of loss. Building insurance quotes should be compared with respect to the wind deductibles, if any. For example, some insurance companies only require a higher deductible for “named hurricanes," but for all other wind damage, the standard policy deductible applies. Small differences in such terms could mean a difference of thousands of dollars out of pocket for a building owner.

Is Earthquake Insurance Included in Building Quotes?

Earthquake damage to buildings is a major consideration in certain areas of the country. In other regions, the risk of earthquake damage is less of a concern. Building insurance quotes for commercial buildings almost always exclude coverage for earthquake. For homeowners, when coverage for earthquake is quoted, it is subject to a very high deductible. In California, for example, most earthquake insurance must be obtained through a separate Earthquake Insurance policy.

What is Backup of Sewers or Drains Coverage?

Backups of sewers into a home can occur when public sewer systems become overloaded. Coverage for cleanup and resulting damage is excluded from most homeowners’ insurance policies but included in most commercial building insurance. Homeowners can buy this coverage back through an endorsement which is typically not expensive to buy. If a building is on public sewer systems, owners should check building insurance quotes to see if additional coverage was included.

The purchase of insurance is the simplest way for property owners to protect themselves from loss or damage to their building. Insurance quotes must be compared not only on the premium, but also on the scope of coverage offered. Differences between policies quoted for the building can result in more limited coverage or even no insurance coverage in certain situations. Taking some extra time to evaluate the details of building insurance quotes can result in better coverage and some peace of mind.

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