Replacement Cost vs. Actual Cash Value: Which is Right for You?

Written By Charlotte Insurance on July 28, 2020. It has 0 comments.

a home belonging to someone deciding between actual cash value and replacement value

When buying homeowners insurance, a lot of terms get thrown around, creating a bit of confusion and leading to many questions. The two most common (and likely most important) terms in your homeowners policy are replacement cost and actual cash value. What are they, and how do you know which one is right for you?

Here’s what you need to know.

Replacement Cost

Replacement cost is exactly what it sounds like. Your home insurance covers the cost to replace a covered item or structure with a brand-new version — up to your homeowners insurance policy’s limit. Replacement cost is not the same as what you paid for your home, and it does not factor in the value of the land. It’s only based on the cost to replace or rebuild personal property or the dwelling.

For personal property, this means that if your TV or furniture are damaged in a covered peril, you’d receive enough money to replace the damaged property with the same model or something of similar quality.

For your home, the replacement cost value is based on the cost of materials and labor to rebuild to a similar size and quality of your existing home. You won’t receive enough cash to build a bigger home.

It’s important to review your policy limits on a regular basis. If material or labor costs are extremely high in your area, your policy limit may be less than the real cost to rebuild. This means you’ll still have to pay out of pocket.

Actual Cash Value

Actual cash value or ACV is exactly what it sounds like, too. When you file a claim, you’ll receive the current day’s value for the item, not the amount required to replace it. It’s important to understand that, over time, the value of almost everything declines. This loss of value is known as depreciation. In determining your claim, adjusters will figure out the ACV based on the replacement value, age, and salvage value (the theoretical amount an item could be sold for at the end of its life) of your property.

For personal property, common items like TVs or furniture will receive less than the cost to replace them. But for rare items like art, gems, firearms, antiques, and others, you would receive the true value, which may be more than you paid.

For your home, the age of the structure and parts of the home that need to be replaced will be considered in determining the value. You’ll only be paid on the depreciated value, regardless of the real cost to replace or rebuild.

Which is Better?

Figuring out which type of homeowners insurance you need comes down to personal considerations and financial needs.

Replacement Cost coverage costs more in insurance premiums, but that’s because you’ll receive more cash in your claim. You’ll pay less out of pocket, assuming your claim isn’t larger than your policy limit. Most people choose replacement cost coverage.

Actual Cash Value costs you less in premiums. However, you will have to pay more out of pocket when you file a claim. For people with large savings or valuable assets, this can be an option.

Ultimately it’s up to you to determine which type of home insurance coverage is best for you, but we’re here to help you figure that out. To update your current policy, learn more about your coverage, or get a quote for a new policy, contact Charlotte Insurance today.


Grilling Safety Tips

Written By Charlotte Insurance on July 21, 2020. It has 0 comments.

a grill belonging to someone ready to follow our grilling safety tips

The warm weather is here, and it’s time to dust off the grill and enjoy the taste of flame-grilled foods and all the barbecue you can eat. Before you light up the propane or the charcoal, it’s important to stay safe. Your family and home depend on it.

Here’s what you need to know.

Don’t Get Too Close

More than half of all home fires started by outdoor grills occur when the grill is too close to the structure of your home. Many people use their courtyard, patio, terrace, balcony, or open porch. Others don’t think to check the clearance of tree limbs over their grill area. Keep your grill at least 10 feet away from your home and clear debris, limbs, and leaves that could catch on fire in an accident.

Keep It Steady

Wherever you place your grill, make sure it sits on a flat surface. You don’t want it to tip over. When it’s not lit, it may damage the patio or deck in a fall. When it’s in use, fire, injury, and more can easily occur if it falls over. Consider using a grill mat to protect the surface and stabilize the area where your grill sits.

Check for Leaks

For anyone with a gas grill, a gas leak is a very real safety hazard. Before you grill, especially after it’s been sitting for a while, check for leaks. Two obvious signs are the smell of gas near the grill and not being able to light it. An easy way to check is to use a soap and water solution on the gas tank hose. Turn on the gas, and if the solution bubbles, you’ve got a leak. Don’t use your grill until the leak has been fixed.

Don’t Let Anyone or Anything Too Close

You know how hot the grill is when you stand over it, and you know how easily you could get burned. Remember that for everyone else, too. Create a perimeter around the grill that’s off limits to kids and pets. And don’t leave your grill unattended while in use. At the same time, watch what you wear while you’re grilling. Loose clothing and apron strings can get singed or catch fire and cause serious injury.

Clean Up After Yourself

Between uses of your grill, make sure to clean it well. Remove grease or fat build-up to reduce the chance of starting a grease fire. Remember, though, that your grill will be hot for at least an hour after you’ve turned it off so give it at least that long before cleaning or moving it. If you use a charcoal grill, wait at least that long before disposing of any old coals.

Plan for Emergencies

No one ever wants anything bad to happen, but that doesn’t mean you shouldn’t plan for the possibility. Keep baking soda by your grill in case of a grease fire. For all other fires, make sure you have either a fire extinguisher or a bucket of sand. A little preparation and a bit of quick thinking can save your home and family from a fire.

Cooking food over a fire is something we’ve done since the dawn of time. For many, it signals the start of summer. For others, it’s how you celebrate family gatherings and entertain. Make sure it continues to be something everyone looks forward to by staying safe.

And to make sure your home is well-protected from fire and other hazards, make sure you have a solid home insurance policy. Contact Charlotte Insurance today for a free quote or to ask questions about your current policy.

How are My Auto Insurance Rates Calculated?

Written By Charlotte Insurance on July 14, 2020. It has 0 comments.

a person calculating the price of auto insurance using a calculator

No one wants to pay a penny more than they have to for their auto insurance. But the factors that determine your premiums can seem confusing and mysterious. While each factor used to calculate your rates is weighted differently, there are some things you can control and some things you can’t.

Here are the various things that determine how much you’ll pay for auto insurance.

Age, Gender, and Marital Status

The details of you as an individual aren’t things you can necessarily control, but they definitely impact your rates.

  • Older drivers tend to get into fewer accidents and so receive lower rates. Younger drivers, especially those 25 and younger will definitely pay more.
  • Women, on average, get into fewer accidents, especially serious accidents and are involved in less DUIs than men. As a result, women tend to pay lower rates for auto insurance.
  • Married couples tend to receive more discounts for bundling their policies and get into fewer accidents on average. Both factors lower auto insurance rates.

What and Where You Drive

The vehicle you drive helps determine your auto insurance rates. Expensive vehicles will have higher premiums because of the additional coverage in case of a total loss. Some vehicles are considered more or less safe than others, based on history of the vehicle and safety features. All of these impact your rates.

But it’s not what you drive that matters, it’s also where you drive. Drivers who only put a few thousand miles on their vehicle a year will pay less than those who drive a lot, whether for long commutes or road trips. The more you drive, the more likely you are to get into an accident which increases your premiums.

Where you live, and therefore park your vehicle, factors into your auto insurance price as well. Urban drivers tend to pay more than drivers who live in small towns or rural areas. Higher rates of vandalism, theft, and accidents occur in areas with more people. But how and where you park your vehicle matters, too. You may pay a little less, even in an urban area, if you have a garage instead of parking on the street.

Your Driving Record

One of the biggest factors in determining your auto insurance price comes down to your past record: driving, claims, and credit. These are the things you have the most control over and indicate whether you’re likely to get into an accident or not.

  • Drivers with better records — few accidents and tickets — will pay less for auto insurance than drivers with lots of accidents and serious violations.
  • If you’ve filed multiple claims in the past, even if the accident wasn’t your fault, that will impact your rate for your current coverage.
  • A poor credit score is often linked with more insurance claims and more instances of insurance fraud. In North Carolina, your credit score won’t get your policy cancelled or deny you service, but it can be used to figure out what (if any) discounts you receive.

Your Auto Insurance

While a lot of personal details may be used to figure out your rate, the auto insurance coverage you choose is a big factor, too.

  • The type of insurance — basic coverage vs “full” coverage — determines your overall rate, before any discounts.
  • A higher deductible lowers your rate while a lower deductible increases it.
  • Previous auto insurance also factors into what you’ll pay for current coverage. Maintaining insurance will save you money in the long-run.
  • Discounts are often available when you bundle your coverage through the same insurance provider. Home insurance or rental insurance combined with auto and life insurance may, overall, cost less than if you buy them separately.

It’s important to buy the most auto insurance coverage you can afford. It only takes one accident to cause real financial stress, if you don’t have enough insurance. Contact Charlotte Insurance today for a free quote on a new policy and to find out what you can do to lower your rates.

What to Do If Your Car Has Been Broken Into or Vandalized

Written By Charlotte Insurance on July 9, 2020. It has 0 comments.

a car that's been broken into

Finding your car broken into and damaged can be like getting sucker punched. It knocks the wind out of you. You ask yourself why and how and could you have done anything to prevent it.

We hope it never happens to you, but if your car gets broken into or vandalized, here’s what to do to make a full recovery.

Stay Calm

Finding your car broken into and damaged is stressful and maddening. It’s important to stay calm so you can do what needs to be done to keep this moment from becoming an even bigger disaster. Look around to make sure no one is around to threaten or hurt you. If neighbors’ vehicles have been broken into, knock on their doors to let them know, as long as it’s safe for you to do.

Go ahead and call the police while you’re assessing the damage.

Document Everything

Take pictures and record video of your car, the damage, and where you are. Also, make an inventory list of everything that was damaged or stolen. This information will be needed by both the police officer for the report and your insurance company.

File the Police Report

Based on your conversation with the police officer, they may come to you or they may ask you to come to the station. If they’re headed your way, don’t move your vehicle until after they’ve arrived and told you it’s okay. If they want you to go to the station, ask if you should leave your vehicle parked or not.

When you file the report, make sure you have this information with you:

  • Driver’s license
  • Vehicle’s registration
  • Insurance ID card
  • Photos of the damage
  • Inventory list of what was stolen and/or damaged

Contact Financial Institutions

This step is only required if anything with your name, address, or other personal information was taken or if your wallet, debit card, credit card, or other bank information was taken. You need to add a fraud alert to your credit record in case the thief tries to open new accounts. You also need your bank accounts frozen so they can’t take or spend your money. Your bank will issue new cards and help protect your account.

File an Insurance Claim

Filing an insurance claim may come in two parts, and it may not be the best option for everyone. If you suffered $500 worth of damage, but have a $1,000 deductible, you won’t receive anything in a claim. But if the damage is large enough or your deductible is small enough, it’s time to call your insurance company.

Homeowners insurance or renters insurance will cover personal property in your vehicle that isn’t part of the car itself. So yes, the theft of your smartphone and laptop may be covered. No, your damaged or missing car stereo won’t be covered.

Auto insurance will cover the damage to your car as long as you have comprehensive coverage. Without this, you’re on your own to fix whatever was broken.

Get Your Car Fixed

Once you’ve called the police and talked to your insurance company, it’s time to fix your vehicle and replace what was lost. Your insurance adjuster will let you know what is available to you through your auto insurance claim. Follow their instructions and timeline to make sure you receive the full amount of your claim. But don’t put off fixing your vehicle as unfixed damage can lead to more damage over time.

If your vehicle is broken into or vandalized, contact Charlotte Insurance. We’ll help you navigate the claims process for any insurer we work with. You don’t have to go through this alone. We can help.

RV Insurance Myths

Written By Charlotte Insurance on July 7, 2020. It has 0 comments.

an RV owned by people reviewing our RV insurance myths

Traveling the country in your RV sounds like a dream come true. Unfortunately, too many think getting RV insurance sounds like a nightmare. It doesn’t have to be that way! Make sure you haven’t fallen for these myths so that you and your home on wheels are protected once you hit the road.

Myth: Your RV is Covered by Auto and Home Insurance

Not quite. Your auto insurance only covers your trailer while it’s being towed, and it only provides liability coverage. Once you unhitch, your auto insurance isn’t available to you. Plus, it won’t protect against any damage, even while you’re towing it. Your home insurance only provides coverage while you’re parked at home, and it’s not enough to cover the kitchen, bathroom, furniture, or accessories. Once you get on the road, your homeowners insurance doesn’t apply.

An RV insurance policy covers your travel trailer, pop-up, or motorhome while parked and on the road.

Myth: Your Travel Trailer Coverage Works for Your Motorhome

That’s a big no on this one. If you think you can simply transfer your travel trailer coverage to your new motorhome after an upgrade, you’re about to be disappointed. Class A, B, and C motorhomes all need a policy that covers the physical components of your RV and your personal possessions. At the same time, RV insurance for motorhomes also offer the kind of coverage found in personal auto insurance coverage. Remember, your auto insurance won’t cover your motorhome.

Travel trailer coverage won’t be enough for your motorhome. After an accident, you’ll be the one paying out of pocket to get back on the road.

Myth: RV Insurance is the Same as Auto Insurance

While RV insurance offers certain protections and coverage similar to auto insurance, it’s not at all the same. Your RV faces different risks that require a different kind of insurance policy. At the same time, your RV has many components that a typical passenger vehicle doesn’t. You need specialized insurance for a special vehicle, especially once that functions as a home away from home with amenities like a bathroom, bedroom, and kitchen.

Just like there are key differences between driving your RV and your personal vehicle, there are key differences between the insurance coverage you need for both.

Myth: All RV Insurance Policies are the Same

As with any insurance coverage, no two policies are identical. It’s important to look at the options available from multiple insurance carriers (and we have access to many carriers to help you!). Your coverage needs will also be predicated on the type of RV you have. Your motorhome requires a different kind of insurance coverage than a pop-up.

Make sure you choose an RV insurance policy that fits the RV you own and your needs as a traveler and owner.

Myth: RV Insurance is Expensive

RV insurance, like all other forms of insurance, comes in a variety of packages and price points. Many people want to depend on their home, auto, or former travel trailer insurance because they fear the cost of RV insurance. Coverage for your RV doesn’t have to be expensive. Just like with other insurance coverage, it’s important to shop around, set realistic policy limits, and look for discounts to bring your costs down.

Contrary to popular belief, you don’t have to overpay for your RV insurance.

Ready to fully insurance your RV, before you hit the road? Contact Charlotte Insurance for a free quote and for answers to your insurance questions.