Homeowners Insurance: Are You Underinsured?

Homeowners Insurance: Are You Underinsured?

Something many of us choose upon our initial purchase of our home and quickly forget about, unless there is a catastrophe involving our home, Homeowners Insurance. It’s understandable, the premium is collected and paid by our mortgage companies through our escrow accounts, out of sight out of mind. However, if disaster strikes you could be in a major bind if you’re underinsured.

According to Nationwide, about 2 out of every 3 homes in America are underinsured!

A study conducted by QuoteWizard in 2022 found that, Idaho has experienced a 34% increase in insurance premiums, the highest hike in the Nation. What’s more, according to the same study the average cost of rebuilding has increased $36,000 since 2020! Nationwide states that the average underinsured home is underinsured by 22% however some have been found to be underinsured by over 60%.

The two variations of Homeowners Insurance are Actual Cash Value (ACV), also known as depreciated cash value, which is essentially the cost of the repairs needed to fix your home minus depreciation based off age & use. The other variation, the most common, is Replacement Cost Value (RCV) this is based off the cost it would be to repair or replace your home with the current building costs. This is where the increase in building, cost of materials & inflation come into play. This trifecta means that it’s now more important than ever to have your coverage evaluated to make sure you’re not underinsured. Don’t forget when you’re having your coverage evaluated that you are remembering any upgrades you’ve made to the property.

With the uptick in premiums and affordability being more important than ever it might not be a bad idea while you’re evaluating to shop rates and coverages. I recommend having an Insurance Agent on your side to get you the best coverage possible for the best rate, what’s more they get to do all the hard work for you, and it doesn’t cost you anymore to utilize their services.

If you have any questions on this or need recommendations on insurance agents, please email me @ logan@sellingthesnake.com