Is Your Insurance Keeping Up with the Rising Costs?
Real Estate prices have increased tremendously over the last few years, however, so have construction costs. Building supplies, labor and building code compliance have all contributed to the rising prices. What are you doing to make sure your homeowner’s insurance program is keeping up with these trends?
The danger in failing to keep pace with these inflationary trends is that in just a few years, it can leave you drastically underinsured. A 4% annual compounded increase after five years will raise costs by 22%. If you are underinsured, you could face a coinsurance penalty which may greatly reduce the payment you receive to repair or rebuild your home in the event of a covered loss.”
It wasn’t too long-ago contractors would advise they could build a new home for $100 to $150 per square foot. Today I hear ranges from $250 to $400 and more per square foot; for a 2,500 square foot home that would mean $625,000 to $1,000,000.
Some insurers offer a “Guaranteed Rebuild” option, or “Specified Additional Insurance” that provides more dwelling coverage if your home is a total loss. The intent is to help cover the unexpected costs in rebuilding your home.
When was the last time you reviewed your homeowner insurance coverage? Would you have enough protection in place to rebuild your home?
The moment of an insured loss is NOT the time to discover you did not carry adequate coverage. If you would like more information on this topic or a second opinion of your homeowner insurance program, talk to one of our licensed agents.