It is time to call your insurance man to review your home insurance. With property values sky rocketing and more importantly the cost of materials going through the roof, you need to make sure you have enough insurance to cover the full replacement value of your home in the event it burns to the ground. The odds are pretty good that you may be underinsured if you have not done a review in a very long time. The last thing you need is arguing with your insurance company in the event of a disaster.
Full replacement value will vary by area. If you live in high cost California or other states with high values and high cost of living, the likelihood is that the cost per square foot to rebuild your home will be higher than if you live in a second or third tier city and or lower cost of living state. The amount of insurance you purchase will determine the premium you pay. If you need to increase your premium to buy more coverage, there is a pretty good chance that the premium will go up 10 - 20% per year; but that is better than not having enough insurance if disaster strikes.
The more equity you have in your home, the more important that you have the right coverage. The reality is that if you have little equity in a worse case scenario, you could just walk away and hand the keys to the bank. However, if your home is paid off and or you have a lot of equity, you will not want to walk away in the event of a disaster. You will want your home rebuilt with the same quality materials and standards it has now.
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