Will the Insurance Company Raise My Coverage Without My Consent?
You must calculate correctly and precisely the amount of home insurance that you want to purchase for your home. The value involved should not be the “market value” but the “total replacement value” of the house in case for some unpredicted reason your house was destroyed or damage. The value of the land though is not carried together with your house. Let’s say, you can sell your house for $400,000 but it only costs around $350,000 to rebuild it. So it’s more logical to say that you should insure your house at $400,000. Factors such as inflation and depreciation will affect the total replacement cost as time goes by and this is very important.
It would be very wise to insure your house at a hundred percent of its replacement cost. Even though it’s very expensive to do that, it is well worth it in case bad fortune befalls on it. Well, you can always have a choice to just insure it around eighty percent of the total replacement cost in case it would be very hard for you to pay for the premiums. It is more likely that only a certain portion of your house would be damaged in case an accident occurs but you’re still going to receive the full amount of replacement cost for it. At eighty percent you are just receiving the actual cost of your house but at a hundred percent you get the actual cost of the house and some additional cash which you can use for other things. Make sure also that all your material possessions inside the house is also insured so that you can ask for reimbursement for it. It would really help if you had a home inventory for that.
In cases like these, we should be aware that our insurance company can raise the coverage of our home insurance to a certain percentage if ever we applied for what we call an inflation guard endorsement. This automatically adjusts the coverage that we have purchased as inflation hits the economy. It is only in this situation that our coverage will have an increase otherwise it will remain the same as we bought it.
Despite the fact that insurance companies can increase our coverage during inflation without our consent, we must also understand that they can void our insurance without our consent too.
This is very important because in case we are stricken by an untoward accident and didn’t know that we are no longer insured, them we might be facing a very bad deal of bankruptcy and a very large debt.
Factors that can actually force the insurance companies to cancel or terminate our contracts are determined solely by them. An example of an action that would surely merit a termination of contract would be falsification of the application data. This is really common especially for those who have preexisting conditions. They hide their sickness just to be able to get the insurance.
Other Insurance companies terminate also the contracts of those who are deliberately “trying” to get their insurance by initiating a premeditated accident or murder. Once you are found guilty of trying to act out on an accident just to get your insurance then the insurance company will not hesitate to terminate your contract.