homeowner's coverage

Have You Taken Stock of Your Homeowner’s Coverage?

Homeowner’s coverage is something that many of us pay each month without a second thought. Oftentimes bundled right into our mortgage payment, this monthly expense is easy to overlook — until disaster strikes.

Without the right homeowner’s coverage, you could be left owing thousands of dollars in the event of a fire, flood, or natural disaster. That’s why it’s so important to periodically take stock of your homeowner’s coverage to ensure that it’s offering exactly what you need.

Know what your policy covers — and what it doesn’t. You may be surprised at what a standard homeowner’s policy doesn’t cover. While it usually provides coverage for damage from fire, hail, and explosions, you’ll need extra coverage if floods or earthquakes are a threat in your area. Problems like sewer backups, mold, and termites aren’t typically covered by standard policies, either.

Know the value of your home — and make sure the limits on your policy are high enough to cover the cost of rebuilding it. Keep in mind that the value of your home may change due to inflation or improvements that you’ve made. It’s a good idea to regularly do a quick estimate on the amount of insurance you need by multiplying the total square footage of your home by local per-square-foot building costs. A local insurance agent or builders association should be able to fill you in on construction costs. Similarly, you’ll want to do an inventory of your belongings to make sure you’ll be able to replace them if need be.

Consider adjusting your policy as needed. For instance, if you think some of the elements of your home may not be up to current building codes, you can get an endorsement to your policy that pays a specific amount toward bringing the house up to code during repairs. If your home is older, you may want to consider a modified replacement cost policy, which will pay for repairs using modern standard building materials and techniques as opposed to historic (and more expensive) features, like plaster walls.

Be aware of rising prices. Inflation is a big factor that can impact the cost of rebuilding your home. If you have no plans of moving anytime soon, you may want to add an inflation guard clause to your policy. This will adjust the dwelling limit to reflect local construction costs. Also keep in mind that hurricanes, tornados, and other catastrophes could cause construction costs to increase suddenly due to demand. A guaranteed replacement cost policy or extended replacement cost policy will protect you in a situation like this.

Look at liability. This portion of your policy protects you against lawsuits for any property damage or injuries that you, your family, or pets may cause to others. Be sure you’re comfortable with the amount your policy offers.

Think of your homeowner’s insurance as just one more thing to keep on your regular maintenance schedule at home. It will take a bit of time and it’s not always fun, but you — and your home — will benefit from the extra effort.

If you’re interested in home ownership topics, have a knack for real estate, and love being part of a strong team, come work with us.