Thursday, January 14, 2016

Upgrades, Inflation and your Homeowners Policy

When you request a quote for Homeowners Insurance, the agent begins by calculating the current replacement value of the home. This calculation includes the current cost of materials, labor, contractor overhead and debris removal. As time passes and/or you make changes to your home, the replacement value should be recalculated, and your coverage adjusted accordingly.

You should inform your agent if you make any of the following changes:
  • Add a pool, porch, screen enclosure, deck or any other attachment
  • Add a garage (attached or detached)
  • Add a room or home extension
  • Upgrade your kitchen or bathrooms. (A renovation that uses similar materials - replacing old tile with new tile, for example, will not change the replacement value of your home. If you upgrade the quality of the materials used - replacing laminate with granite, for example, this will change the replacement value of the home.)
Even if you don't make any changes to your home, the replacement value should be recalculated every few years or so. Some policies have a built-in Inflation Guard, which increases your coverage by 4% every year, but this is not always adequate. Your agent can recalculate the replacement value of your home any time that you ask.

As we've discussed before, the importance insuring your home for its full replacement value cannot be emphasized enough. At the time of a loss, (even a partial loss!), you may be penalized or have your claim denied outright if you don't carry enough coverage. Ask your agent, or contact us with any questions.

1 comment:

  1. Thank you for sharing such great information. It has help me in finding out more detail about House Insurance!