Home Coverage Limits
Determining the proper limit of insurance coverage for your home is very important. You’ve made a valuable investment and your hard earned money will be used to pay the annual premiums. If you suffer a loss, you want to know you are properly covered. But how do you know what is enough?
How do I know I have enough?
Your agent has tools and resources that can help to calculate the estimated cost to rebuild your unique home in the event of a loss, including the cost to remove debris. Replacement cost estimators take information regarding the construction of your dwelling, the quality of the finishes, unique features, and average cost of construction in your area to calculate the replacement cost.
What about the purchase price?
Keep in mind, you do not want to use the purchase price as a coverage limit. Purchase prices fluctuate and include value of your land. It is not an indication of what it would cost to rebuild your home.
What if I’m wrong?
Even with the tools provided to your agent, it’s not an exact science. Construction costs could suddenly skyrocket. Cost of building materials could increase over the average. That is why most insurance carriers provide an option to purchase EXTENDED DWELLING COVERAGE.
Extended dwelling coverage provides a cushion that will increase the amount paid for reconstruction costs. Common increase increments are 25% or 50%.
If your policy does not include an extended dwelling coverage limit clause you will be limited by the coverage listed on your policy in the event of a claim. Check with your agent to see if extended dwelling coverage is available on your policy!