How Much Should You Insure Your Home For?


Calculating insurance value or reconstruction costs can be complicated. The age and condition of your home will be some factors to consider when determining how much you should insure your home for. We hope this information will make the process a bit simpler.

What is reconstruction cost?
Reconstruction cost is the cost to hire a contractor to replace your home as it is. This cost is not the same as the market value. Market value is the price at which a house, in its current condition, will sell for within 30 to 90 days. Obviously, no 2 homes are exact, which creates a multitude of considerations that go into formulating the appropriate amount of coverage for reconstruction cost. Here are some things to consider:

Many homeowners want to be involved in the process of rebuilding their homes. However; with that being said, homeowner involvement can increase the time it takes to reconstruct which in turn, will increase cost. It is important that a homeowner be wary of the projects however; don’t be the pesky homeowner that impedes on progress. Finding a quality builder who is certified to work on your projects can also take time.

Custom features
Can the features that make your home unique be items found in a local retail store or are they “special-order” features that require some research? (This can include built-in cabinetry, stereos, media systems, custom window treatments, and high-end appliances.) All custom features may need to be included in replacement cost.

Age of the home
Older homes may have unique features that can be very difficult to replace ie.; custom-sized doors and windows. Custom anything usually increases replacement cost. For example, older homes typically have plaster walls…the cost of a plaster is greater than drywall. Is your home in a historic registry or located in a historic district.? Perhaps there are strict code requirements and/or ordinances that could make even small losses costly. Be sure to speak with your agent about these requirements.

Building codes
A rebuilt home may have to meet building codes that weren’t in place at the time your home was first built.

Site accessibility
The amount of difficulty that a contractor has accessing your property to re-build damage to your home can influence the cost. (New homes are typically built on empty lots that large machinery can easily access.) Time and labor to work around landscaping, neighboring properties or restrictions set by the community can increase the cost.

Economy of scale
Builders can receive discounts on materials and labor when multiple homes are built at once. Note: these savings will not apply to rebuilding cost.

Natural disaster effect
When materials and labor are scarce due to economic and/or weather-related conditions, costs can rise. We know that high demand and limited supply drives costs up. These expenses can include engineer and contractor fees, labor, and foundation.

Demolition and debris removal
Depending on the type of loss, a significant amount of cleanup may be required prior to starting the rebuilding process.

Keep your coverage up to date
As you build a life in your home, you may make enhancements that, in the event of a loss, you would want to replace. Whether you make additions or improvements yourself or hire a contractor, remember to update your homeowner insurance. Your agent can work with you to update your Coverage A limit (which determines the amount of insurance you have to reconstruct your home in the event of a total loss). We are ready to help determine the amount of protection you need to rebuild your home and replace your belongings. Thank your for trusting Bruen Deldin DiDio to protect you and yours.