Do you have enough coverage on your home to rebuild it if it burned to the ground? What does your appraised value have to do with your dwelling coverage amount?
July 5th, Joe and Sarah are awakened at 5:30a to someone banging on their door and repeatedly ringing the door bell. They hear, ‘WAKE UP, WAKE UP!!! YOUR HOUSE IS ON FIRE!!!’ Could this be you? YES!!! Their house burned to the ground along with all their belongings. Luckily no one was hurt. Now what. They call their insurance agent. The agent quickly contacts someone to begin cleaning up the mess and helps the client get their claim started. They will need a place to stay, some clothing and to begin the demolition and rebuilding process. What if, during the initial insurance purchase process the biggest concern to Joe and Sarah was the premium and not what the policy covered or if there was enough coverage. This could lead to a coverage amount of less the necessary cost to rebuild a home. On average the minimum cost to rebuild starts @ $100/sqft. Question: What do Joe and Sarah do if they are under insured? Answer: They have to pay out of pocket any additional costs associated with rebuilding their home.
How do you keep this from happening to you? Review your reconstruction cost calculation on your insurance policy with your Agent. Make sure your policy contains a dwelling coverage amount that meets or exceeds the estimator; no less than $100/sqft. If ever in doubt, ask about extended replacement cost. A common question is “Shouldn’t my house be insured for the same dollar amount as the appraised value of the home?” The answer is no. The appraised value of your home is what the home is worth at that moment. As the housing market fluctuates, so does your appraised value. The dwelling coverage amount is simply the amount it will take to rebuild your home if it were to a total loss. Appraised value and dwelling coverage are like comparing apples to hamburgers, not even in the same food group.
We are happy to review your current policy coverage with you. The last thing you need is to have to come up with additional funds because your house burned down. Call our office anytime to make an appointment today!! 972.772.0540 or you can email us at [email protected]