Understanding insurance to value. How much coverage is enough?
"Insurance to value" is the phrase the insurance
industry uses to describe the amount of insurance needed to rebuild or replace
your property if it is completely or partially destroyed
by a covered peril. The cost to rebuild property is different than
your properties market value because replacement cost value's includes various
costs and conditions that have changed or probably weren't present when the
structure was originally built.
How much insurance is enough that's the question. We recommend
insuring your home, dwelling or business at 100% the replacement cost value. We
will work with you to establish an accurate replacement cost value for your
home or business. To calculate the replacement cost will use construction cost
data provided by recognized appraisal agencies, as well as the information you
provide to us about your home or business.
Once a replacement cost is established the value is adjusted
annually to keep up with inflation. We also recommend you review your coverages
and limits periodically with us especially if changes, alterations or
improvements are made to your home or your business.
How is replacement cost calculated? Several factors impact the
dwelling replacement cost value. It is also important to note that
reconstruction usually costs more than new construction.
of scale. This alone can increase the cost of rebuilding by thousands of
dollars when compared to new construction.
versus rebuilding. New construction starts with the foundation and builds up.
Repairing or rebuilding a structure that is damaged often means removing damage
materials and working down. Working from the top down is more time-consuming
and debris’ removal and protecting what’s not damaged.
in building codes. Sometimes even undamaged parts of the structure may have to
be brought up to current building codes and using improved building martials.
to the worksite.
materials and features.
How can you be sure you have enough insurance? Review your policy
to make sure everything is covered to your satisfaction. If it's not, check
with us into increasing your coverage amounts.
If you don't understand something in your policy just ask!
Remember to review your policy coverages each year when you receive your new
declarations page. Any major remodeling you do can increase the replacement value
of your home. Work with us to make sure your coverage limits are adjusted
Questions, thoughts or comments just let us know.
If you have insurance topic ideas that you would like us to cover or need more information on, please let us know. We are always here to answer any questions you have.