In the unfortunate event your home is damaged and suffers a total loss, do you have adequate insurance in place to rebuild? If you haven’t reviewed your homeowners policy recently, the answer may be no.
Over the past few years, building costs have skyrocketed. According to the American Property Casualty Insurance Association, the price of construction materials rose by 44.1% between December 2019 and December 2021. This spike was driven by several factors, including overall inflation trends, COVID-19 impacts, increased natural disasters, and supply chain problems.
Homeowners policies may contain inflation guard provisions that increase a home’s insured value at every policy renewal. However, those standard increases may not be enough. Even if your home suffers a partial loss, these unprecedented price increases could potentially drive the cost of repairs over your policy limit.
Review your coverage limits with your insurance agent regularly to be sure you’re fully covered. Additionally, there are some coverages to consider adding to your insurance to best protect against loss:
Guaranteed Replacement Cost – Covers the full cost of repairing or rebuilding your home after a total loss, even if it exceeds the stated limit on the policy.
Ordinance or Law - Helps cover the increased costs to repair or rebuild a dwelling because of building codes or ordinances.
Additional Living Expenses – Covers the increased costs of lodging, food, and other necessary living expenses while your home is being repaired or rebuilt.