Upgrade Your Home Insurance When Upgrading Your Home
September 5th, 2008
Homeowner spending on home improvement projects is anticipated to increase by 44 percent between 2005 and 2015, according to a 2007 remodeling industry report from Harvard. Since property insurance limits are tied to the home’s replacement cost – it is important to upgrade your home insurance policy as you upgrade your dwelling. Replacement cost is the amount needed to rebuild your home with the same quality and materials in the event of a total loss, rather than the market value. A region currently experiencing a slow real estate market may have diminished your home’s market value; however, that does not mean the cost of rebuilding will be less.
Many insurers have developed tools to help you determine a proper replacement cost estimate, and also offer a low-cost endorsement (an amendment attached to your insurance policy) that, in the event of a total loss, offers additional coverage up to 120% of your policy’s coverage amount.
Homeowners should review their home insurance coverage on a yearly basis, and it is especially important to do so before beginning any home improvement project. Increasing your coverage before renovations begin will protect you from the costs of repairing or rebuilding damage to the new addition. Your home’s replacement cost estimate should also reflect the price of the building materials and labor associated with residential construction in your community. This will fluctuate due to inflation and other factors, so ask your insurer if they offer inflation protection coverage. This coverage, which automatically adjusts your policy limits to keep pace with inflation, is usually free.
Regardless of the type of renovation, or if you haven’t reviewed your home insurance policy in at least a year, be sure a complete home insurance review is done. Adjusting the coverage limits of your policy isn’t limited to major renovations, any special changes such as finely crafted doors or moldings, uniquely vaulted ceilings, or custom windows may make your current level of protection inadequate. Your insurance agent can advise you on your limits, endorsements and available discounts
[Keywords: home insurance ]
Entry Filed under: Home Improvement Info, Consumer Issues