When was the last time you really looked at your home insurance policy? A common assumption people make is that a home insurance policy is a “set it and forget it” decision. This is far from the truth!
Studies show that many homeowners do not actually have enough coverage to rebuild their home if disaster struck. If a house was a total loss due to a fire or severe storm damage, the policy may not fully cover rebuilding the home. In this situation, a person could be left with a major financial gap. According to LendingTree, 1 in 7 homes is underinsured, meaning their current policies may not fully cover the cost to rebuild their home.
This highlights a sobering reality: many people believe they are protected, but in a serious event, they could still face steep out-of-pocket costs. That can turn an already stressful situation into one with significant financial hardship. That is why it is important to understand whether your current insurance provides the coverage needed should rebuilding become necessary.
Inflation Changes Everything
Since COVID-19, the cost of building materials and labor has increased dramatically. Lumber, concrete, shingles, and skilled trades are all more expensive than they were just a few years ago. Insurance companies often adjust policies over time with incremental dwelling increases, but those small annual adjustments do not always keep pace with real-world rebuilding costs. The longer you go without reviewing your policy, the larger the coverage gap can become.
Coverage Options That Can Help
Some companies offer Guaranteed Replacement Cost coverage, which means they will rebuild your home with similar quality materials and finishes, even if the cost exceeds your policy limit. Not every company offers this, but Erie Insurance is one that does, which is one of many reasons we are pleased to offer Erie to our clients. It is worth asking your agent about these options to ensure you have optimal coverage and peace of mind.
What You Can Do Right Now
Talk to your agent about your current coverage and whether it would truly cover today’s rebuilding costs. This conversation does not have to feel overwhelming. It is simply an opportunity to ensure you are protecting your assets.
Update your policy if you have made improvements or renovations to your home. While adjusting your coverage may increase your premium slightly, that is far better than being underinsured if you ever need to rebuild. Insurance works best when you and your agent stay connected and keep your coverage up to date.
Know this: our team is here to help you through all of it. You do not have to feel overwhelmed by insurance decisions. We are here to provide guidance, answer questions, and help ensure you have the protection you need from people you know and trust.
