While stuck indoors this winter, did you look around and plan any home projects? Whether you do it yourself or hire a contractor, remember to update your homeowner insurance as you increase your home’s value.
The Coverage A limit on your homeowner policy is the amount of insurance you have to reconstruct your home in the event of a total loss. All costs associated with replacing or rebuilding your home are considered when developing this Coverage A limit. When you make changes that increase the value of your home, you may also need to increase the coverage limit.
Reconstruction cost is the cost to hire a contractor to replace the home as it is, in today’s marketplace, using materials and design of similar quality. Determining the reconstruction cost of your home can be a challenging and complex process. In most situations, reconstruction cost does not reflect the market value, tax assessor value or the initial construction cost of the home – even on a new home.
Construction industry statistics indicated that there was a downturn in home improvement expenditures after the recent economic recession. But now, things are starting to turn around.
Bill Shaw, GMR, GMB, CGP, a remodeler from Houston and chairman of the National Association of Home Builders Remodelers, recently commented that 2013 ended on a high note for remodelers. (See: “Remodeling Market Index Steady at Historical High.”) “We expect to keep this positive momentum going in 2014 as more homeowners will continue to take on remodels and repairs that had been postponed in the downturn.”
As you plan your next project, take an inventory of your home’s new features. Consider interior changes as well as exterior. Does the addition on your home have a different roof material than the rest of your home? Does the new deck you built include a kitchen, built-in grill or electric fireplace? Is your contractor making time this winter to install built-in bookshelves and TV cabinets? Are you finishing your attic area to create an extra bedroom? Did you upgrade your windows?
You may put lots of time into picking out countertops and appliances for your new basement kitchen, type of wood for cabinetry, color of brick to match the original portion of your home, quality of decking materials and other factors. Remember to share these important changes with us. Most insurance companies offer a replacement cost endorsement to ensure you will get the full reconstruction cost to rebuild your home in the event of a covered total loss, or a percentage more than the limit of insurance on your declarations page. You may also wish to explore this option with us.
While changes and updates you make to your home are important, consider other factors when estimating the cost to rebuild your home. Cincinnati Insurance discussed a number of them in one of their earlier blogs “7 factors to help nail down your home’s reconstruction cost”. Their blog “Don’t be surprised by the cost to rebuild your home” explores tools available to calculate replacement cost. And their blog “Insurance TLC for your historic home” describes building features to consider for older homes.
Give us a call at 919-772-0233 and ask for Angela or Casandra. They will be able to discuss your homeowner coverage with you and make sure your home and the investment it represents are adequately insured in the event of a loss.
Content provided by the Cincinnati Insurance Companies