Homes all across the nation have
been decreasing in value – in
some areas up to 30% in the past
3 years!
Meanwhile, the cost of labor and
construction materials have increased
dramatically due to increased global demand for
lumber, steel and concrete.
What does this mean for your insurance plan?
With your home likely being one of the biggest assets,
you want it adequately protected. What is adequate
protection? Do you insure it for the amount you paid for
your home? Do you insure it for the (shrinking) resale
value?
The answer is, neither. Think of it this way: Your
insurance serves to restore your home to its pre-loss
state. That means, if your house burns down, you want
a policy that pays the cost to replace your home, taking
into consideration any increases in construction costs. In
other words, you want a policy that offers *replacement
cost* (as opposed to “actual cash value.”)
Keep in mind that rebuilding after a major loss actually
costs more than new construction, because you also
have to account for demolition and debris removal
expenses. (Think about the cost of your last trip to the
dump…)
If building costs continue to
rise, it means that your
homeowner’s policy should
be reviewed regularly to
make sure that its *limits* still
provide adequate
protection.
The same is true if you have
made substantial additions
or improvements to your
home. When in doubt, just
give our office a call.
Farcone Insurance Agency, Inc.
888-327-2663
Get a free review
