How to Estimate Your Home’s Rebuilding Costs

from Gammons Insurance Agency Inc.

May 09, 2014

Home Replacement Cost....When you purchase Massachusetts home insurance, you need to make sure that you have enough coverage. This coverage typically comes in three categories – protecting the structure of your home, protecting the property in your home, and protecting your family with personal liability coverage.

We have not yet fully covered the idea of estimating your home’s replacement cost. Oftentimes, your insurance agent can get a good idea of what it would cost to rebuild your home, and will make sure that this amount is factored in to your home’s insurance policy.

When talking to your insurance agent, though, here are a few things that you should consider:

Market value may not be a good estimation of your home’s rebuild cost.
Oftentimes, people use the market value of their home as an estimate of what it would cost to rebuild the home. In fact, the replacement cost of a home is often head and shoulders above its estimated market value. Using the market value could leave you in quite a rut if you are ever involved in a situation that requires your home to be rebuilt.

The home insurance required by a mortgage is often not enough.
When you acquire a mortgage, the lending institution that you use will often require that you purchase a certain amount of home insurance coverage. This required amount is typically enough to cover the mortgage, and is not sufficient for covering you in the event of a more dire situation.

You need to make sure to keep an eye on your local building costs.
The cost to build a home changes over time. If you last evaluated your rebuilding costs 10 years ago, chances are that it has changed since then. With the rising costs of materials and labor, among other factors, it follows that home construction costs should rise. So too, then, should your home insurance coverage.

Your home insurance policy should be adjusted to allow for each change you make to your home.
If you ever make a change to your home, it needs to be accounted for in your home insurance policy. Inform your insurance agent if you plan to:

Add a pool or a deck
Remodel a room
Finish your attic or basement
Install hardwood flooring
If your home is damaged or destroyed, you will need to rebuild adhering to new building codes.
In the unlikely (but still possible) event that you need to rebuild your home, you will need to make sure that the new structure adheres to current building codes. For older homes, this could require a little bit more insurance coverage to make sure that you won’t personally foot the bill for the extra costs of bringing the new home “up to code.”

If you think that the cost of rebuilding your home is not adequately reflected in your home insurance policy, please call 508-947-3460 to discuss this. We will work with you to adjust the coverage of your insurance policy in order to assure that you are fully protected in

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