With the prices of home renovations and building materials rising coupled with skyrocketing market values there are many homeowners around the nation that may be underinsured.
It is said that the cost of rebuilding a home is somewhere around $36,000 more than it was in 2020. This is according to the results of a study compiled by the company Lendingtree, a large mortgage entity.
The last few years brought a series of crazy and unexpected events in many different areas of the real estate realm. Some huge changes to the market as well. Homeowners insurance was also an industry seeing major changes over the last couple of years. One huge contributing factor is the rapid and steep incline of home value.
In general homeowners insurance is calculated upon an estimate of what it would cost to rebuild a home. When a home value increases this will increase the cost it takes to rebuild a home as well as the increase in material cost. So there are many homeowners out there insured for home values of the past not realizing this coverage is now inadequate for today.
It is smart for every homeowner to check their home insurance coverage on a periodic basis to ensure that they have enough coverage should they need to rebuild their home. It is also a good idea to make sure that everything on your property is covered as you may be unaware that your policy does not cover a certain area of your property. For example, if you have any outbuildings like a large shed or a barn, you want to make sure that these things are covered within your plan.
Along with a steep incline in property value, there has also been a surge of homeowners adding to their homes. One of the most popular ways in which homeowners have decided to add to their property is with the building of accessory dwelling units in the form of sheds and tiny homes to create space in a much more budget-friendly way than the current renovation costs of adding onto a home.
There is an increasing number of people not only with higher home values but with larger amounts of homes to insure. Whether it is from adding to the home, adding an accessory dwelling unit, or even just upgrading. Many of these popular accessory dwelling units are being used for office space to work remotely while still feeling like you have your own office. The surge in remote work caused many people to realize that their homes may not hold enough space for all the functions that they needed to do there.
Additional: How to Improve Indoor Air Quality
Every single home has had a change to its fair market value and as such, every homeowner would be wise to doublecheck their homeowner’s insurance coverage to make sure that they have plenty of insurance to cover the cost of rebuilding as well as making sure that every area of their home has coverage. You do not want to find yourself in a disastrous situation only to discover that your insurance will only go so far and you now need to cover the costs to completely get back to “normal” out of your own pocket.