Determining
your home's replacement value is the first step toward you having a homeowner's insurance policy that provides
the protection you want and need.
The
purpose of the Replacement Cost option for homeowners insurance is to repair or rebuild your dwelling to its pre-loss condition.
Most insurance companies require that your coverage is not less than 80% of the cost of replacing your home.
Replacement
cost does not include the value of your land. It is not the market value of your home, and it is not the mortgage amount,
either. It is how much it would cost to rebuild your house exactly the way it was prior to the loss.
Have
you remodeled your house or made additions since your original purchase? Have you upgraded your bathrooms or added
new kitchen cabinets? Have you added custom molding or energy efficient
windows and doors? Each of these items increases the replacement cost of your home.
Don't
forget inflation. Inflation and material supply affect the cost of building materials. The labor market also affects
the cost of workers who will rebuild your home. Another option for your homeowners policy is an inflation rider or endorsement that
will increase your coverage on an annual basis to keep pace with inflation.
Ken Simonson, Chief Economist for Associated General Contractors of
America, reports construction costs for single-family dwelling rose 3.5% in 2003, 7.3% in 2004 and 5.4% in 2005. The 2005 figure
does not include cost fluctuations for the devastating hurricanes toward the end of the year.
Your
house - your home - your dwelling is often called the largest single
investment most people make during their lifetime. How much would
it cost to replace your house? Please consult with our agents to
determine what is the best protection for the best possible price FOR
YOU.
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