When was the last time you reviewed your home insurance policy? If it’s been more than five years, there’s a good chance the replacement cost listed in your policy isn’t keeping up with the times—and that could leave you underinsured when you need coverage most.
Real Talk from the Front Lines
Just this week, I sat down with a client to review his homeowners insurance. We took a hard look at the rebuilding costs for his home and realized they were significantly outdated. We ended up increasing his replacement cost by $100,000.
You might think, “Rhett, you’re just trying to raise my premium.”
Trust me, I get it. I don’t like paying more either. But here’s the kicker: that extra $100,000 in coverage only added $23 a year to his premium. That’s less than two bucks a month for a massive upgrade in protection.
Replacement Cost vs. Market Value
Let’s clear up a common misconception: the replacement cost of your home is not the same as its market value. Replacement cost refers to what it would actually take to rebuild your home from the ground up, using current materials and labor costs. Market value includes land and location and fluctuates with the housing market.
In short, if you’re basing your insurance coverage on market value, you might be missing the mark.
Inflation Is No Joke
Over the past few years, we’ve seen sharp increases in construction costs due to inflation, supply chain issues, and labor shortages. Lumber, roofing materials, plumbing supplies—you name it—they’re all more expensive than they were five years ago.
That means the cost to rebuild your home today is likely much higher than it was when you last reviewed your policy.
Why This Matters
If your coverage doesn’t reflect today’s rebuilding costs, you could be facing a major financial gap in the event of a loss. No one likes paying higher premiums, but what you definitely don’t want is finding out you’re underinsured after a fire or storm damage.
Take Action Today
Give your insurance agent a call—or if you’re in the Greece, NY area, give us a ring at VanScoter Insurance. We’ll walk you through a review of your current policy and make sure you have the coverage you need to fully rebuild, should the worst happen.
It doesn’t cost much to bring your policy up to date, but the peace of mind? That’s priceless.
