Costs Considered: Home Owners’ Insurance & Replacement Costs Coverage

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Jessica Entwistle, Department Manager, Personal Insurance

Just a few years ago, homeowners never could have predicted the amount of time they would be spending in their homes, working, homeschooling, cooking and finding sources of entertainment. More time at home means more strain placed on home systems like our furnaces and air conditioning units. We also continue to feel and see environmental effects-natural disasters like wildfires in the west, flooding in the south and harsh winters in the northeast continuing to wreak havoc on our homes.


It’s easy to overlook replacement cost coverage since most homeowners think they have enough through their homeowners’ policy. But, that’s not always the case. With future uncertainties, now is the time to reassess your current coverage. Simply put, replacement costs are what it is going to cost you in the event of a total loss, should you need to rebuild your home in the exact same spot with the exact same materials. One of the major misconceptions is that replacement costs are the same as the market value of your home. Often, homeowners are surprised to learn that a house value at replacement cost is exponentially higher than the comparable sales in their area. What they fail to realize is that costs can vary depending on:

• The region: Where you live ultimately determines that type of environmental disasters you are more susceptible to experience.

•The time of year: Rebuilding a home in the middle of January in the northeast can expose homebuilders to some real challenges and higher risk. Additionally, those parties involved are going to get you back in your home as quickly as possible, rather than hold off for warmer temperatures. This of course, will impact costs.

• Access to materials & workers: Not only are costs for materials high right now, but so is labor. With people spending more time at home, contractors, electricians and plumbers are in low supply and high demand. The construction industry is also busier than ever.

These challenges combined, can drive up costs for you and if you don’t have a policy that has enough coverage, you may be paying out of pocket. Based on industry claims data, replacement costs are continuing to rise across the country, regardless of carrier.


Luckily, there are several ways to protect yourself and your family:

• As your replacement costs adjust, check to make sure everything is correct.(Remember, you don’t want to be over insured, either!) You can do this by simply giving us a call and we can check this for you. We’ll follow up by asking an array of underwriting questions: Did you update your home or add any enhancements such as a pool or outdoor kitchen? Did you convert part of your garage into a home gym? These types of upgrades are linked to your dwelling coverage and consequently, replacement costs.


• Whatever your replacement costs estimate is, you should always build a cushion to avoid out-of-pocket expenses. We recommend putting in as much as you can afford-typically 25%-50%. In a claim, the last thing you want to be asking yourself is, “Do I have enough coverage?”


• Maintaining a home inventory isn’t a bad idea either. Taking videos of each room/closet in the home is the easiest way to ensure everything is accounted for after a loss, and you don’t have to rely on memory.

Whether you’re thinking about increasing coverage on your existing policy or just need an update on it for peace of mind. Get in touch today. You can reach me directly at Jessicaentwistle@libertyins.com or 472-577-5774 ext. 218.

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