The purchase of a home is one of the biggest investments most people will make. Protecting that investment is important -- a responsibility we take very seriously. If someone’s home is damaged, we want to rebuild it just like it used to be. The best way to ensure that will happen is to verify the home has the proper type and amount of insurance coverage.
The problem:
Industry data has revealed nearly two out of three home owners have inadequate insurance -- by an average of almost 20%. Unfortunately, most people will never know it – until it’s too late. There are a number of reasons a home could be insured for less than the cost to rebuild it.
In some cases, homes are insured for an amount based on their (real estate) market value. The market value of a home can be less than the amount it would cost to rebuild a home – especially when real estate is down.
In other cases, homes may be insured based on their original cost to build. This amount, too, may be lower than the cost to rebuild a home. Here are a few reasons why:
- Building materials used to replace a single home are more expensive than the bulk rate available when an entire housing development is initially constructed.
- Many times a new home is built on an empty lot, whereas, replacement of an existing home often incurs an additional cost to remove and discard debris from the destroyed house.
- Worldwide demand for lumber, concrete and other building materials remains high.
In other situations, a house may have been originally insured for the amount it would cost to rebuild the home, but over time has undergone some type of remodeling or renovation (from new flooring or counter tops, to the finishing of a basement or attic, to the addition of a room or deck). This is often times done without increasing the limit of insurance on the home. If an insurance agent is not made aware of a remodeling project or a home renovation, there is a good chance the home will be insured for an amount less than the cost to rebuild it.
Our solution:
State Auto has a two-pronged approach to help ensure adequate protection. First, we operate through local, independent agents who work and live in the areas and neighborhoods they service. Our agents have sophisticated tools to estimate the cost to rebuild homes. As an added safety measure, we also use third-party experts to help verify rebuilding costs on many of the homes we insure.
Is your home adequately protected? Find out by contacting an independent State Auto agent today.