FOCUS ON RECONSTRUCTION COSTS, NOT MARKET VALUE
One of the most important conversations an agent can have involves replacement cost. Homeowners often believe market value and insurance value are the same. In reality, market value may be heavily influenced by location, school districts, land values, and local real estate conditions. Insurance is concerned with reconstruction cost!
Agents should regularly review recent replacement cost estimates, inflation trends, remodeling projects, additions, upgraded kitchens and bathrooms, finished basements, roofing improvements, and custom construction features. Many homeowners are surprised to learn their home ' s reconstruction cost substantially exceeds its market value. It’ s kind of a scary thought considering the rising property assessments facing Kansans.
This discussion should naturally lead to an evaluation of Ordinance or Law coverage. Building code requirements continue to evolve, and older homes often require substantial upgrades following a major loss.
Additional building code requirements related to electrical systems, plumbing, accessibility standards, and energy efficiency can create significant out-ofpocket costs after a claim. And don’ t forget to touch on any cosmetic exclusions and % deductibles, which are particularly important in the Midwest.
For higher-value homes, agents should also evaluate whether extended replacement cost or guaranteed replacement cost options are available from the carrier.
DON ' T OVERLOOK ANY OTHER STRUCTURES
Detached garages, workshops, sheds, guest houses, pole barns, and similar structures are often ignored during policy reviews.
Many homeowners assume these structures automatically have unlimited coverage. However, Coverage B is commonly limited to 10 % of the dwelling limit. For some properties, especially rural homes, that amount may be insufficient.
Agents should ask clients to identify and describe all other structures on the premises. Particular attention should be given to large detached garages, workshops, barns, equipment storage buildings, guest houses, and specialty structures. Understanding how pools are covered by the policy, especially if it is considered attached or an other structure, is also important.
UNDERSTAND |
HOME-BASED |
BIZ |
EXPOSURES |
|
|
The home-based business exposure remains one of the most frequently overlooked personal lines risks. Many clients operate side businesses without considering themselves business owners. Online retail operations, consulting services, bookkeeping businesses, photography studios, crafting businesses, and social media content creation can all create property and liability exposures.
Agents should determine:
• Whether business property is present
• Whether customers visit the premises
• Whether inventory is stored on-site
• Whether employees work at the location
• Whether business activities occur in detached structures
Potential solutions may include the Permitted Incidental Occupancies Endorsement( HO 04 42), carrier-specific home business endorsements, inhome business policies, or a Businessowners Policy( BOP).
The key objective is ensuring both property and liability exposures are addressed rather than assuming the homeowners policy will respond.
MAY / JUNE 2026
21