If your home were destroyed by fire or a hurricane, would your insurance fully cover the rebuild? For many homeowners, the answer is no.
Rebuilding costs keep rising, but many policies don’t keep up. That’s how homeowners end up underinsured without realizing it.
Why Homeowners Are Underinsured
Being underinsured means your policy may not fully cover the cost to rebuild after a major loss.
Rebuilding costs can rise faster than your coverage.
After the Marshall Fire, 79% of homeowners were underinsured, with an average shortfall of $139,000.
Why Rebuilding Costs Are Higher
Materials
Construction materials cost more than they did a few years ago.
Labor
Labor shortages can push rebuilding costs even higher.
Inflation
Inflation impacts nearly every part of construction.
Cleanup
Demolition and debris removal add to the total cost.
Market Value Is Not Rebuild Cost
Market value includes land and location. Rebuild cost is based on labor, materials, and construction costs at the time of loss.
4 Ways to Avoid Being Underinsured
- Review your coverage. Make sure it reflects current rebuild costs.
- Ask about extended coverage.
- Check inflation guard.
- Review your policy yearly.
Most people review subscriptions every year, but forget to review their insurance.
Watch the Full Breakdown
Watch the video to learn why homeowners are underinsured and what you can do to better protect your home.
