Momentum - Business to Business Online Magazine MOMENTUM Feb_Mar 2019 | Page 28
JAN LAMAN
Harbour Insurance Services
[email protected]
How much Insurance do
I Need on my Home?
T
his is a great
question, and one
that our customers
ask frequently.
You should have
an amount of insurance that
is sufficient to rebuild your
home in the event it is totally
destroyed by a fire, tornado,
hurricane or other insured
catastrophe. It’s estimated that
about 60 percent of American
homes are under insured by
an average of 22 percent,
according to a company that
provides building-cost data to
the insurance industry. Your
home is probably your largest
single investment, so insuring it
adequately is an important part
of maintaining your financial
independence. The amount of
insurance should cover the cost
of rebuilding your home at current construction costs,
not including the value of the land. Don’t think about the
price you paid for your home or the appraised value. The
cost of rebuilding could be more or less than the price
you paid or could sell it for today. Besides the cost of
materials and labor you normally consider when thinking
about building a home, there are other considerations
such as:
✓ The expense of clearing debris from the lot before
rebuilding can begin
✓ Fees for an architect or other design professional to
estimate costs and produce plans to be followed by
the contractor
✓ Rapid inflation in the cost of building materials and
labor following a major catastrophe that affects a
number of homes in the same area
✓ Local building codes that require replacement with
additional features or more expensive materials
Debris Removal & Water or Fire Restoration Costs
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MOMENTUM
When rebuilding a home after a loss, you can’t start the
process until the lot has been cleared of the debris. This
is an additional expense you wouldn’t incur if you were
building a home from scratch. There are also costs for
Water or Fire Restoration Expenses when preparing a
home for partial or complete rebuild. Most policies pay
debris removal and/or Water or Fire Restoration Cost
expenses in full, but the payments reduce the amount of
insurance available to replace the home.
Extended Replacement Cost Coverage After a
major hurricane or a tornado, building materials and
construction workers are often in great demand. This
can push rebuilding costs above homeowners policy
limits, leaving you without enough money to cover the
bill. To protect against such a situation, you can add an
endorsement on some policies that pays an additional
amount up to 25% of your Dwelling Coverage limit for
the additional costs.
Not all insurers offer these features, so be sure to ask
us to find an insurance company that does offer them if
this exposure is important to you.