Monday, 29 August 2016

The Relationship between Homeowners Insurance and Inflation

Homeowners insurance is a necessity of you have a home. It keeps you at peace knowing your property is covered in case of a damage or loss. One of the first things to know before buying this policy is the value of your home. This information is vital to determining whether you would have problems getting repairs for the actual value of the home.

With each passing year inflation rates either increases or decreases. However, generally inflation can be said to increase steadily over the course of years. This means the value of your home as at when you bought the insurance policy may have increased after several years. Here's a good example of this relationship.

Roshan Mark had always had the dream of owning his home. That dream became a reality when he paid off his mortgage on the property five years ago. He had done the necessary appraisal and got a good deal for a homeowners insurance policy. Few years after that, the economy wasn't as favorable as it had once been. While this didn’t seem to affect him directly, summer of last year, his home was engulfed with fire.

He was lucky his insurer has an inflation guard to keep his home properly covered. Unlike Roshan, most people are not so lucky. Ensure you speak with your insurance agent on this during every policy review.

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