Your home is one of your most valuable assets but most people spend very little time making sure they have the right insurance policy. Make sure you have enough dwelling coverage on your homeowners insurance policy to rebuild it to its original state. And while the current market value of your home may be lower than you’d like, the cost to rebuild may be higher than you think.
Cost to rebuild
The cost to rebuild your home is based on a number of factors and can often be higher than the potential selling price of your home. That’s because the price of building materials may have increased over the past few years while the value of real estate has generally decreased. This is especially true with older homes. Older homes have unique characteristics and materials that are generally more expensive to rebuild.
Key factors that impact the cost to rebuild your home include:
- Total living area (square footage of home)
- Age and Quality of Materials (hardwood floors, crown molding, granite counter tops)
- Style of home (e.g. ranch, contemporary, colonial)
- Exterior wall construction (e.g. frame, brick)
- Number of kitchens and bathrooms
- Garage type (e.g. attached, detached, built-in)
- Special features (e.g. fireplaces, porches, skylights)
- Additions or enhancements (e.g. finished basements; in-law apartment)
Why rebuild costs can differ
Costs to rebuild your home often differ from home market values, mortgage requirements, tax assessments and real estate appraisals. This is due to a number of factors:
- Costs for many raw materials that are needed to make repairs or to rebuild have increased in recent years, in some cases very significantly.
- Specialized workers are often needed, in the event of a loss, to prevent further damage to your property.
- Building codes may have changed since your home was built.
- Make sure you have the right coverage
- Updates, additions and improvements to your home may increase the amount of coverage you need. The most common changes that could increase the amount of coverage you need include: Installing hardwood floors, updating a kitchen or bath or adding a deck.
Keep your coverage current
Review your coverage each year to be sure it reflects the cost to rebuild.
Inform your agent of any home improvements or remodeling projects you’ve completed in the past year. Consider that even small home improvements can affect the cost to rebuild your house.
Be confident in your insurance choices. Contact The Andrew Agency today at (804) 320-2886. We’ll work with you to develop a homeowners insurance policy that fits your needs and your budget.