Insurance customers are starting to see their property insurance renewals increase and they may not understand why
An initial reaction could be my insurance company just filed for a rate increase..
But that may not be the case
One possible reason your renewal went up is because the insured value or replacement cost value on your policy increased
What’s going on?
The cost of building materials have increased which affects the cost to rebuild your home
Insurance value or Replacement cost is not based on your home’s property value but on the cost to rebuild your home if you were to hire a contractor
This amount includes the cost of building materials
In only a few years the cost to rebuild your home may have increased from $100 per square foot to $200 to $250 per square foot
Increased Insurance Valuation
A 2500 square foot home could cost $200 a square foot to rebuild in today’s building material costs so the insured value on your policy should be 500,000
(2500 x 200 = 500,000)
If your home insurance policy is currently at 300,000 your insurance company could have re-evaluated your insured value and increased the insured value to 500,000 without taking a rate increase
This could result in a large increase on your homeowners insurance renewal rate
What Can You Do?
You can talk with your agent and review the insurance company’s replacement cost estimator to determine if the property description values are correct
If you would like us to review your insured value and renewal rate just request our office to reach out to you when you’re ready
