Your home is likely your biggest investment, but if disaster strikes, will your insurance truly protect you? Many homeowners don’t realize they are underinsured until it’s too late—especially in total loss scenarios like a fire. Here’s why reviewing your policy is essential:
Rebuild Costs Are Higher Than You Think
Construction costs have surged, with rebuild rates ranging from $600-$1000 per square foot in many areas. If your policy doesn’t cover this, you may be left paying out of pocket to rebuild your home. Check your coverage limits and ensure they reflect current market building rates.
Rental Coverage: Can You Afford to Wait?
If your home is destroyed, where will you live while it’s being rebuilt? Many policies include loss of use or rental coverage, but limits vary. A home rebuild can take a year or more—make sure your policy provides enough to cover temporary housing for the duration.
Claims History Can Affect Your Future Sale
Even if you rebuild, a history of multiple insurance claims could make your home harder to sell down the line. Buyers (and lenders) often check a property’s insurance history, and too many claims could raise red flags. Think twice before making an insurance claim. The risk of potentially losing your coverage or impacting the salability of your property in the future may not be worth it in the long run.
Don’t Forget About Personal Property Coverage
It’s not just your home that needs proper coverage—your belongings do too. When you lose everything, replacement costs can add up quickly. Take time to discuss the appropriate level of coverage for:
- Furniture & Appliances – Beds, couches, kitchen appliances, and electronics add up fast
- Special Items – Jewelry, artwork, collectibles, high-end electronics, sports equipment, and even expensive clothing may require additional coverage beyond your standard policy limits.
Many policies have caps on personal property coverage, so make sure yours is enough to fully replace what you own.
Buying a Home? Check Insurability Before Waiving Contingencies
If you’re purchasing a home, don’t assume insurance will be easy to secure. Some homes—due to past claims, location, or construction type—may be difficult or expensive to insure. Always investigate this before removing your insurance contingency during escrow. A call to your insurance broker early in the escrow can save you a lot of headaches and lost sleep!
A quick call to your insurance provider could save you thousands (or more) in the long run. Don’t wait until it’s too late—review your policy today and set a reminder to review it annually.
