Your Home is probably UNDERINSURED!

​I think most would agree that if feels like we are in unprecedented times and for an unprecedented number of reasons. I would like to focus on just one of those areas for the next few hundred words, that being the huge spike in the cost of goods, services, and labor.  This doesn’t just impact you directly, but indirectly as well. This indirect impact means it’s likely your real estate (and even your vehicles) is UNDERISNSURED.

​According to CoreLogic, one of the nation’s largest providers of construction, building materials, and labor cost analytics, there has been a significant increase in these costs. Based on their quarterly reports, US building materials have shown a significant increase. Amongst the largest increases were lumber (54%) and plywood (42.6%). 

When you go to Home Depot or Lowes, or even a lumber yard you directly feel these costs.  But when was the last time you evaluated your homeowner’s insurance? All these adjustments have basically occurred in the last 12 to 18 months, so if it has been longer than that, you are probably UNDERINSURED. This is why the Insurance to Value, ITV, of your home is so important!

Here’s a perfect example. One of my clients, Chris and his wife bought their house for $282,900 in August of 2020.  The home is currently insured for that same amount, which is an issue unto itself.  Once narrowing the quotes down to the top four options they all came back with reconstruction values over $400,000. The moral of the story is, if Chris had a total loss, he would be looking at major out-of-pocket expenses. Even conservatively,  let's say the reconstruction value is $300,000, that’s still over $17,000 he must come up with. 

In the end, they chose the company that provided the greatest amount of coverage, $474,000, but not the largest increase in premiums, only a difference of $473.24 for the year. That math works out to well below the average fancy cup of coffee at just $1.30/day. You should be re-evaluating your home policy, at least every couple of years.  This is not only one of the most cost-effective things you can do for your wallet but also for your peace of mind.

If you haven’t done a review in the last 18 months, it's time to call your agent!  If you don’t have an agent, well now you do! Reach out, there’s no obligation and I’d love to give you some peace of mind.