Why Home Owners Insurance Is Dangerous
You buy a home and buy Arizona Home Owner Insurance at the same time. Then you stuff your home owner's policy in a drawer for the next ten years.
How Often?
How often do you meet your agent? Once a year? Once every five years?
When it comes to your home you need to be inquiring into your dwelling coverage amount at least once every TWO years. If you do not, you are putting your greatest assets at risk.
Let Me Tell You a Story
In northern Arizona a few years back, there were two devastating forest fires. Dozens of homes and cabins were total losses.
These home owners believed that they would be ok because they had home owners insurance.
What many found out was this - their policy did not pay to completely rebuild their home. They had purchased insurance but never bothered to ask, as the years went on, if they had adequate coverage.
The Costs Today
It takes more money to build/rebuild a home today than it did 10 years ago. Lumber, flooring, plumbing, wiring, labor and all the other costs go up. Look at gas prices. Things go up in cost.
These northern Arizona home owners did not do their due diligence and stay on top of their own policy. Their agents didn't either.
What To Do?
1) First of all, ask your agent to complete a current rebuild estimation. Ask him/her to mail a copy to you. Yes - be so bold. It is your most valuable asset!!
2) Ask your agent how much replacement cost you have on your policy.
Here is what I mean: Home insurance policies usually have added coverage above whatever your home is covered for. It could be 125% or Unlimited.
FOR EXAMPLE: If your home is insured for $200,000 and it has 125% replacement the insurance company will go as high as $250,000 to rebuild your home.
Unlimited is best, but not all companies offer it.
How Much Should I Insure My Home For?
In Arizona about 7 years ago, we were insuring typical tract homes for $80 per square foot. Today that amount is around $105-$110 per square foot, and rising.
If you own a typical home calculate how much YOUR home is insured for, per square foot. Use the above as a guide only.
If you own an upscale home, you may need to insure your home for much higher, say $150 per square foot.
TALK TO YOUR AGENT
Tell your agent you have been reading about rebuild costs. Ask him/her to complete a new rebuild calculation (if it has been awhile).
Ask him/her how much per square foot your home is currently insured for and calculate the per/square foot factor.
Remember, do not go by "current value" of your home. Rebuild and Resell are two different things.
Your foundation will not need to be laid a second time. Your land/lot is not burning down.
DO IT NOW
Your home is a valuable asset. Do the above immediately. After a claim is too late.
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