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 26 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.