Most of the homeowners policies we sell our clients have certain favorable provisions that ensure coverage exists to rebuild their homes in the event of a total loss. These provisions place the burden on the insurer to appraise the home’s replacement-cost value and determine what additional expenses would be necessary to bring the new home up to current building codes. This would have to include an estimate for the anticipated local inflation of materials and labor following a catastrophe loss, should that be involved. Of course, it is necessary for the insurer to update this value every year.

It is important to note that these policies generally require that you advise the insurance company before renovating, upgrading or expanding before you can include these changes in your guaranteed replacement. You should expect additional premium to be charged for the necessary change in limits resulting from most of these home improvements.

Remember, the replacement cost of your home is likely to be different from the market value, as that amount includes the lot size, location, age, aesthetics, neighborhood, economy and expected local development.

If you are not sure about the coverage currently in place for your home, please give our agency a call and we will review it with you.