When was the last time you really looked at your home insurance policy? A common assumption that people make is that a home insurance policy is a “set it and forget it” type of decision. This is far from the truth!
Studies show that a large number of homeowners don’t actually have enough coverage to rebuild their home if disaster struck. Meaning, if a house was a total loss due to a fire, storm, or flooding, the policy may not fully cover re-building the home. In this instance, a person would be left with a huge financial gap. According to a Lending Tree, 1 in 7 homes is uninsured, meaning their current policies won’t fully cover the cost to build their home again.
This highlights a sobering truth: many people believe they are protected, but in a serious event, they could still face steep out-of-pocket costs. It would turn an already incredibly stressful situation into one with potential financial devastation. That’s why it is important to ensure you understand if your current insurance provides that necessary coverage should a re-build become necessary.
Inflation Changes Everything
Since COVID-19, the cost of building materials and labor has gone way up. Lumber, concrete, shingles, and skilled trades are all more expensive than they were just a few years ago. Insurance companies try to adjust policies over time with incremental dwelling increases but those small annual bumps don’t always keep pace with real-world home rebuild costs – gaps remain. The longer you go without a review, the bigger the gap can get because of how the gaps compound year over year.
Coverage Options That Can Help
Some companies offer Guaranteed Replacement Cost coverage — which means they’ll rebuild your home with similar quality materials and finishes, even if the cost ends up being more than your policy limit. Not every company offers this but Erie Insurance is one that does, which is one of many reasons we are so pleased to offer Erie to our clients! It’s worth asking your agent about all of this to make sure you have optimal coverage and peace of mind.
What You Can Do Right Now
- Talk to your agent about your current coverage and whether it would really cover today’s rebuild costs. This conversation doesn’t have to be scary or intense. It is simply an opportunity to ensure you are protecting your assets.
- Update your policy if you’ve made improvements or renovations. Yes, adjusting your coverage might raise your premium a little. But that’s far better than being caught short if you ever need to rebuild. That small increase can shield you from financial devastation in a major loss. Think of it as paying for peace of mind today rather than being overwhelmed tomorrow.
- Stay in touch. Insurance works best when you and your agent stay connected and keep your coverage up to date. Remember that this is a two-way-street of communication and you can (and should) proactively reach out with updates about your home, such as renovations you’ve made.
We are Here to Provide Support!
Know this: our team is here to help you with all of this! You do not need to be overwhelmed by your insurance realities because we can equip you with the right information to establish your optimal coverage based upon your unique circumstances. Allow our expertise to support you as we work together to ensure you have the protection you need – from the people you know (us!).
