Is your Home Insurance Adequate?
Many people believe they have adequate home insurance coverage. However, recent statistics suggest over 21% of respondents do not have enough insurance in the event of a disaster. If they were required to rebuild their homes, they simply would not have sufficient coverage to do so. There are a number of reasons why this occurs but there is a way for homeowners to protect themselves.
What is the Value of Your Home?
Many policies simply undervalue the actual dollar cost to rebuild a property in the current economy. Many homeowners have at least a general understanding of what their home is worth if the home was up for sale. However, when it comes to construction costs, building costs, contractor costs, the current market and availability of contractors, well, most homeowners have little understanding. In most cases, the estimate of owners is well below the true cost to replace their home.
What is the Cause of This Difference in Value?
Typically, we buy our home insurance policies with an agent. Depending on the company, you are sometimes only providing very basic information about your home. You may be relieved to get questions about the age of the home, the square footage, and the address and feel that the process is very smooth when little else is asked of you. You solicit a quote. Usually, more detail is required to effectively figure the rebuild cost of a home. In the event of a disaster, you could be in for quite a shock.
And if you fail to disclose accurate information about the house or if you are doing upgrades, for example, then you are setting the stage yourself for being underinsured.
Who is at Risk for Being Underinsured
If you are underinsured, it's your responsibility. Not the insurer. Ultimately, the buck stops with you. The insurer will not and cannot take that risk. The agent will likely not specifically accept this responsibility. So, it is up to you.
Why Renewals Matter
As time passes and construction costs increase, the disparity in your replacement cost and the actual rebuild cost grows. Renewals are the majority of business for most insurers.
Figuring out rebuild costs every year will show you that they are continuously increasing. And what follows is a higher premium. Homeowners must look at the facts. Costs rise. Premiums have to follow. When construction costs to rebuild the home rise, the amount of insurance coverage obviously must follow. It's important for insurers to be factual in these matters.
Homeowners must be aware of the costs, risk, and facts at hand. Take the time to properly assess your home rebuild costs annually. It's another part of your overall financial portfolio and should be treated with appropriate gravity. Anticipate an increase or at the very least, prepare for it. It is the best path to take. In the end, all that matters is that you are covered and your home is safe.
What is the Value of Your Home?
Many policies simply undervalue the actual dollar cost to rebuild a property in the current economy. Many homeowners have at least a general understanding of what their home is worth if the home was up for sale. However, when it comes to construction costs, building costs, contractor costs, the current market and availability of contractors, well, most homeowners have little understanding. In most cases, the estimate of owners is well below the true cost to replace their home.
What is the Cause of This Difference in Value?
Typically, we buy our home insurance policies with an agent. Depending on the company, you are sometimes only providing very basic information about your home. You may be relieved to get questions about the age of the home, the square footage, and the address and feel that the process is very smooth when little else is asked of you. You solicit a quote. Usually, more detail is required to effectively figure the rebuild cost of a home. In the event of a disaster, you could be in for quite a shock.
And if you fail to disclose accurate information about the house or if you are doing upgrades, for example, then you are setting the stage yourself for being underinsured.
Who is at Risk for Being Underinsured
If you are underinsured, it's your responsibility. Not the insurer. Ultimately, the buck stops with you. The insurer will not and cannot take that risk. The agent will likely not specifically accept this responsibility. So, it is up to you.
Why Renewals Matter
As time passes and construction costs increase, the disparity in your replacement cost and the actual rebuild cost grows. Renewals are the majority of business for most insurers.
Figuring out rebuild costs every year will show you that they are continuously increasing. And what follows is a higher premium. Homeowners must look at the facts. Costs rise. Premiums have to follow. When construction costs to rebuild the home rise, the amount of insurance coverage obviously must follow. It's important for insurers to be factual in these matters.
Homeowners must be aware of the costs, risk, and facts at hand. Take the time to properly assess your home rebuild costs annually. It's another part of your overall financial portfolio and should be treated with appropriate gravity. Anticipate an increase or at the very least, prepare for it. It is the best path to take. In the end, all that matters is that you are covered and your home is safe.
About the Author:
Square One offers the only Calgary Home Insurance policy that can be truly tailored to your needs. Receive a quote and buy a policy online or by phone. Or Visit our Alberta Tenant Insurance video.
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