Over the last several years, communities across our state have been significantly impacted by natural disasters. From the once-in-a-lifetime floods that poured over Nashville in 2010 to the devastating tornadoes that struck the city in 2020, and most recently, on the West Coast, where catastrophic fires erupted in California, displacing more than 200,000 residents in the Los Angeles area—these types of events are unfortunately all too common.
For current homeowners and anyone looking to purchase a home, understanding homeowners insurance is critical to ensuring that your most valuable asset is protected.
Homeowners insurance is a policy that provides financial protection against damage to your home and personal belongings caused by certain events, such as fire, theft, vandalism, and some natural disasters. It also offers liability coverage, which protects you in case someone is injured on your property. While homeowners insurance typically covers common perils, it’s important to note that not all natural disasters, like floods or earthquakes, are included in standard policies. These often require additional coverage.
If you’re taking out a mortgage to purchase a home, your lender will almost always require homeowners insurance to protect their investment. Even if you’re buying a home outright, having a policy is essential for safeguarding your financial security.
When selecting a homeowners insurance policy, it’s important to understand the two common types of reimbursement:
Actual Cash Value is the current value of an item that loses value over time due to use and/or age (depreciation). The insurer pays out the cost to make repairs, minus any depreciation. This reimbursement type is most often used for replacing personal property but could also be applied to your dwelling if your property is significantly underinsured (less than 80% of replacement cost)
Replacement Cost Coverage is the amount needed to buy a new, similar version of something you own. Insurers often cover this for your dwelling or property up to the limit of the insurance policy.
It is worth noting that many insurers will no longer cover a roof that is over 10 years old due to the prevalence of hail and wind damage in our area. This is important whether you are buying or preparing your home to sell.
If you’re in the market to purchase a home, it’s imperative to start looking at policies early and consult with a Realtor who can connect you with a licensed insurance agent to help guide you through the process. A proactive approach to securing the right insurance coverage can save you significant stress—and money—when the unexpected occurs.
As natural disasters continue to impact communities across the country, we’re reminded of the power of coming together to support one another. You can make a difference today by partnering with the REALTORS® Relief Foundation, which provides critical aid to families recovering from disasters. The Realtors Relief Foundation is accepting support for victims of the devastating January 2025 wildfires. Text RRFCAStrong to 71777 or visit rrf.realtor to make a donation.
