So you have a homeowners policy covering your house. If your home were to be completely destroyed tomorrow by fire or a windstorm, would it be rebuilt/replaced at no cost to you? If you feel the answer is, “yes”, you might be surprised at what you’re about to see in this video:
Many insured’s have not reviewed their homeowners policies for several years or more…even over a decade in some cases. It is the homeowner’s responsibility to make certain they have enough coverage to fully indemnify them in the event of a total loss. Thus, if the cost to replace your home has increased over the years, you have to verify that your policy contains enough insurance to cover you in the event your home is destroyed.
Here are some ways to help ensure you have enough homeowners coverage in place:
-Determine the dwelling value in your homeowners policy (AKA: Coverage A)
-Hire a building contractor (or two) and get an appraisal as to what it would cost to completely rebuild your home exactly as it was using like kind and quality materials. If the appraised amount is more than your Coverage A limit, you are under-insured *Note* Higher valued homes (over 2500 square feet of living space and with custom features) cost more to rebuild per square foot than “cookie-cutter” homes
–Contact your insurance broker or agent to increase the Coverage A limit in your homeowners policy
-Verify you have an inflation guard rider in place, which automatically increases your Coverage A limit each year by a small amount (typically 3%-5%)
-Review your homeowners policy every two years or less to confirm you have enough coverage in place to protect you in the event of a loss
*Remember* The replacement cost of your home is completely unrelated to the market value of your home.