Today’s homeowner may see the value of homes around them on the rise. Many real estate markets are noticing this. But, does it impact your home insurance policy? It could, especially in areas where significant value increases are playing out. If your area is one of these, contact your home insurance agent to learn more about improving your policy. What do you need to do?
How Much Is Your Policy Worth?
A good place to start is with an understanding of the value of your home insurance policy. Now, it is always important to invest in enough coverage to rebuild your home. This is not the same as the current sale price of the property. Building it generally costs more. However, rising home prices lead to rising building prices, too. In other words, if your area is seeing significant jumps in home prices, then the cost to rebuild your home is likely up as well.
To determine what your home insurance coverage is, contact your insurance agent. Your policy should offer information as well. Is it enough to cover the cost to rebuild your home? If your policy is not for this need, update it with your insurer.
How Much Should You Have?
It is not possible to put a specific figure or even percentage on this. This differs from one community to the next. However, there are a few things you can do right now to determine if you have enough coverage.
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Ask your agent about recent claims in your area. How much is a home like yours likely to cost to rebuild?
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Talk to an area builder. You can have an appraisal done or have the builder offer estimates to you.
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Look at the various costs to rebuild a home right now. Local construction can give you some indication of this.
Adjusting the amount of coverage you have is important for various reasons. Importantly, it helps ensure you have enough coverage to rebuild if your home suffers a significant or total loss. If not, you may not be able to rebuild fully, or you may have to pay out of pocket for some of your losses. To avoid this, update your policy as you notice home values in your area rising. It may not cost you much to add more coverage to your plan. However, it will provide a significantly higher level of coverage.