How much would it cost you to rebuild your home if it was destroyed by a fire? It's possible that reality is not what you expect. In the case of a covered loss, your homeowner’s policy may not cover the whole cost of rebuilding your house if it isn't insured to its total replacement cost.
According to recent studies by major insurers, approximately 70% of houses in the United States, or two out of every three, are underinsured by at least 18%. This means that in the event of a total loss, such as a fire, the homeowner may be held liable for a large amount of the reconstruction costs. Working with an insurance professional to negotiate your home value issues will help you avoid misunderstandings and secure fair compensation in the case of a loss.
The market value (appraisal value) tax value of your home is entirely different from how much it would cost to rebuild your home in case it was completely damaged.
Replacement Cost Considerations
There are a number of factors that go into determining your home’s replacement value, including:
- Type of construction quality
- Materials used in the construction
- Size of your home
- Your lot configuration
- Are there any unique materials, like imported stone, marble, etc.?
- The overall quality of construction, is your home average construction or high-end?
- The average cost per square foot for new construction in your area.
The level of homeowner’s insurance you purchase is determined by your specific requirements. Insuring your home or other property for its full replacement value will help you prevent large out-of-pocket payments that could deplete your funds and cause you to change your estate plan. In addition, the contents of the home, other structures on the land, additional living expenditures, liability, and other factors should all be considered. Consult your agent about the right amount of coverage for your home and how to best arrange your policy.
These are just a few of the personal insurance issues that can create real problems for you. Call our office for a free review. Please contact us or give us a call to learn more. You can also request a quote if you’re ready to start on a policy. Valley oaks Insurance Agency is proud to provide insurance in Roseville, Sacramento, Lincoln, Granite Bay, Rancho Cordova, and Folsom, CA. We also serve other areas in the state.
The information shared in this blog is provided and written on an opinion basis and for informational purposes, they do solely represent the opinions of Valley Oaks Insurance.