When it comes to home insurance, one of the most important things to focus on in your Homeowners Policy is the right amount of coverage to rebuild your home. Never has this been more true than in today’s market, and it’s especially important with all that’s happening with skyrocketing building material costs, ongoing supply chain issues, and even labor costs associated with rebuilding your home.
To ensure your policy stays up-to-date, most insurance companies include an annual, automatic 3-4% inflation guard, which covers the rise of both building materials and labor expenses. It’s why you’ll typically see an annual increase in your policy – carriers want to make sure there isn’t a gap in your dwelling coverage that could pose an unnecessary risk.
If you’ve recently done any shopping, whether for a small home building project or even for supplies to get one or two rooms painted, you’ve probably noticed how much everything has gone up in price – WHEW! If prices are increasing for small home improvements, imagine just how much more it would cost to rebuild your home in the event of a total loss!
More and more often we’re hearing from clients who are wondering, “Based on today’s market, do I have enough coverage for my home?” and so we wanted to address this for everyone.
Let’s talk about Coverage A, also known as your Dwelling Coverage
Coverage A is the amount of coverage included in your Homeowners Policy that helps rebuild your home. This is one of the most important coverage amounts affected by the automatic inflation guard. The 3-4% increase would usually provide enough buffer to rebuild your house in a normal market. However, in our current situation that would likely not be the case. As a result, many of the insurance carriers we represent recently set an 8-10% inflation guard (rather than 3-4%) to make sure you have adequate coverage in today’s unpredictable market.
Now let’s talk about Coverage C, also known as Personal Property Coverage
Coverage C comes into play for everything you carried into your house. You remember, don’t you … all that stuff you moved into your home one load at a time! When it comes to Personal Property Coverage, think furniture, appliances, and all the clothes everyone in your household wears throughout the year. Think computers, gaming systems, pots and pans, even your toothbrush and toothpaste.
We explain it this way – if you turned your house upside down and shook it, everything that falls out would be considered Personal Property and would be covered under Coverage C. Building materials and labor have gone up in price, but it seems everything else, including our personal items, has been affected, too. So when it comes to Personal Property, Coverage C was increased by a significant amount in case you had to replace all your stuff.
While finding you an excellent rate for the right coverage has and always will be our top priority, making sure you understand the different coverages represented in your Homeowners Policy remains at the top of our list.
If you have any other questions about your home coverages, please call us today!