In 2021, over 14 million homes across America were impacted by severe natural disasters, including hurricanes, wildfires, and blizzards. These events caused nearly 57 billion dollars in property damage, as reported by CoreLogic, a global property data company. Rebuilding your destroyed home is an overwhelming project that can cost thousands of dollars. Your homeowner’s insurance can help cover the cost through proper coverage policies. With natural disasters on the rise and certain states at higher risk, it's as crucial as ever to invest in homeowner’s insurance for your home.
Reconstruction Costs
Your insurer will estimate rebuilding costs when prior to purchasing insurance. There are many factors to keep in mind when evaluating reconstruction costs.
· Construction type: Depending on the damages, your home may need site preparation or reverse construction.
· Labor costs: Repairing your home will require different types of tradespeople, such as electricians, carpenters, and roofers. Labor shortages may result in higher labor costs.
· Updated building codes: Adhering to new building codes may require rewiring and replumbing, among others.
· Material costs: The quality of the building materials and supply shortages will affect these costs.
· Partial damage: If your home was partially destroyed, the remaining structure must be protected from further damage.
The features of your home will also be considered, including the number of bedrooms, roof type, age, and square footage.
Replacement Cost vs Market Value
Your home insurance amounts are based on its replacement cost rather than the market value. The reconstruction cost value is the cost to rebuild your home to its original standards at the current prices of construction materials and labor. Market value refers to the amount your home is worth in the current housing market. Using the market value to determine coverage limits may result in being overinsured and paying too much for coverage, or being underinsured and not having sufficient policy limits to rebuild in the event of a disaster.
Rebuilding Your Home With Homeowner's Insurance
Your home insurance will provide you relief and help you navigate the difficulty of rebuilding after a disaster. Before you purchase a policy, you’ll determine the dwelling coverage with your insurance professional. Dwelling coverage is the portion of your homeowner's policy that covers the costs of repairing or rebuilding your home if it's damaged. The dwelling coverage amount should equal the reconstruction cost. You can get a replacement cost estimate when choosing the right homeowners policies. For adequate home insurance coverage, be sure to provide accurate information about your home, such as its size, age, location, and unusual features.
Update Your Policy to Stay Covered
Many homeowners have a rift in current rebuilding costs and their current coverage. Increasing building costs and inflation can leave you underinsured. Your home insurer can help you re-evaluate your home to ensure your coverage amount is up-to-date. Insurance inflation protection is another option that adjusts your dwelling coverage each year adjusted for inflation. After completing renovations on your house, you may also need to update your insurance to cover the home’s added value. Be prepared for a natural disaster by regularly reviewing and updating your home insurance coverage.
Guaranteed or Extended Replacement Cost Coverage
Coverage enhancements improve your dwelling coverage if your policy limits aren’t high enough to cover a costly rebuild. Extended replacement cost coverage provides a certain percentage of extra coverage on top of your dwelling limit. If the repair or rebuild costs more than your insured amount, this coverage will supplement the additional costs. With guaranteed replacement cost coverage, the cost to rebuild your home will be covered regardless of the price.
Although severe weather is rising in frequency, homeowner's insurance can give you peace of mind and assist in rebuilding your home in the event of a disaster.