Homeowners Insurance

Market Value vs. Rebuilding Cost

Your home’s market value includes factors like:

• The land your home sits on
• The local real estate market
• School districts
• Neighborhood demand
• Nearby home sales

Insurance companies don’t insure those things.

Instead, they calculate what it would cost to rebuild your home from the ground up using today’s construction costs.

That estimate includes:

• Demolition and debris removal
• Labor
• Building materials
• Permits
• Architectural plans
• Roofing
• Electrical, plumbing, and HVAC systems
• Interior finishes and fixtures

In many cases, rebuilding costs are significantly different from a home’s market value.

What Happens If You’re Underinsured?

If your dwelling coverage isn’t high enough to rebuild your home, you may have to pay the difference out of your own pocket after a major loss.

Many homeowners don’t discover they’re underinsured until they file a claim.

By then, it’s too late to make changes.

It’s Not Just About the House

A complete homeowners policy also includes protection for more than just the structure itself.

You should review whether your policy provides adequate coverage for:

• Personal belongings
• Detached structures such as fences or sheds
• Additional living expenses if your home becomes uninhabitable
• Personal liability protection
• Medical payments to others

Each of these coverages plays an important role in protecting your financial future.

When Should You Review Your Coverage?

You should review your homeowners insurance whenever:

• You renovate or remodel your home
• You replace your roof
• Construction costs increase significantly
• You purchase expensive jewelry, electronics, or collectibles
• Your policy comes up for renewal

Even if nothing has changed, reviewing your coverage every year can help ensure it still reflects today’s rebuilding costs.