Understanding the Value of Your Home

How to determine your homeowner's coverage

Your home may be the biggest investment you'll ever make. So if you're serious about protecting that investment, here is some important information to consider when determining the coverage amount for your home.

Make sure that your home is insured for at least 100% of its estimated replacement cost

To determine your amount of homeowners coverage:

• Get an estimate of the replacement cost of your home, and
• Select the coverage amount that best fits your needs.

We recommend that you purchase an amount of coverage at least equal to the estimated replacement cost. But the choice is yours. Determining your home’s estimated replacement cost is important because this will ultimately determine which policy options are available to you. Since it is impossible to predict today what the exact cost will be to replace your home in the future, it’s important to have enough coverage to account for unforeseen circumstances.

 Review your policy annually to make sure that your coverage meets your needs

Have you recently remodeled or improved your home?

When you upgrade or improve your home, you may increase your home’s estimated replacement cost. Contact us to adjust your policy accordingly when you remodel or make improvements to your home.

Has the rate of inflation risen since your last appraisal?

We provide coverage that automatically adjusts each year in an effort to compensate for increases in construction costs in your area. However, certain conditions such as severe weather can increase the demand for labor and materials, and raise costs beyond normal inflation. It is important to update your coverage amount each year to keep up with the changing economy.

What influences the building costs in your area?

Market conditions in your area may impact the amount it will cost to rebuild your home if you experience a loss. Replacement cost estimates are influenced by supply of labor, demand for labor, and the cost of construction materials. Keeping up with the current market conditions in your area, and changing your coverage amount accordingly, will help you maintain coverage at least equal to 100% of the estimated replacement cost coverage for your home.

Understand the difference between market value and replacement cost for insurance purposes

Market value is the amount a buyer would pay for a home, including the land, regardless of how much it would cost to rebuild the home. Replacement cost for this purpose is the rebuilding cost necessary to repair or replace the entire home.

Replacement cost IS NOT:

• The market value of the home.
• The home’s purchase price or the cost of the land.
• The outstanding amount of any mortgage loan.

Before you purchase a new home, make sure that you determine the appropriate amount of coverage needed. Here’s how:

• Ask if a replacement cost estimate is available when you have the home appraised.
• Or, consult with your local builder association or a reputable builder for an estimate.
• You can also check with us to help you with this process.

• Upgraded bathrooms or kitchens (including cabinets).
• Additional rooms.
• Custom molding or arched windows.
• Other unique features.

Understanding Flood Insurance

One of the most important ways to prepare for a flood is to buy a flood insurance policy.

Most homeowners policies do not cover flood damage.

Most flood insurance is written through the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Agency (FEMA).

A flood insurance policy normally takes 30 days from the date of purchase to go into effect. So, don't wait until a flood is imminent to buy a policy.