There’s an interesting article in the Wall Street Journal this month explaining many homeowners are underinsured. Here’s the two minute takeaway:
One, remember that standard homeowner policies do not cover flood or earthquake. And in some areas they exclude wildfires. Those perils must be covered by separate policies.
And two, your structure limit (the most the insurer will pay to rebuild your house) must be high enough to cover reconstruction cost at the time of the loss. Reconstruction cost will be higher than original construction cost for three reasons:
- Inflation in labor and material costs
- Lack of volume discounts that may have been applied to your original construction cost
- Potential cost spikes in a disaster environment
For example, after Hurricane Harvey local construction labor and material costs increased 10-25%…in two months!
If you own a home you need to be sure you have the right insurance and the right limits at the right price. We are more than happy to answer any questions you may have. Just send us an email or give us a call.