There are many factors that affect ever-changing home replacement costs. Due to fluctuating building costs, supply and demand and our everlasting economic standing your homeowners coverage needs to keep pace with the current replacement cost of your home.

As a consumer, it is very important to review your California Home Insurance policy at least once a year before your renewal period. If you don’t have enough coverage or replacement cost on your policy, in case of a catastrophic or total loss you will not be able to rebuilt your home, avoid financial loss and most importantly protect your family.

When reviewing your insurance policy, here are some points to remember:

In most cases, rebuilding costs are higher than new construction costs.
Removal of debris and demolition costs can easily add another four to seven percent to the total cost of rebuilding a home.
Special materials or custom features can be costly to replace. Custom built and older homes can include materials that are hard to replace. Many of these features – solid doors, custom ironwork, exposed beam ceilings and stained glass can be expensive to duplicate.
Construction costs rise after natural disasters. Widespread natural disasters cause the demand for building materials and contractors’ fees to rise. In many cases, local supplies of lumber are depleted quickly. Builders may need to bring in materials from elsewhere in the country, and often within short time frames. That combination brings about overtime pay and greater shipping charges.
The inflation rate of building materials usually exceeds the inflation rate of the general economy. The cost of construction materials, especially lumber, frequently increases faster than the cost of other goods and services, and much faster than the inflation rate.
Preserve the remaining structure. Parts of the property not destroyed in a loss need to be protected. A partially damaged roof, missing window glass, and holes in the walls may need to be covered to prevent future damage.

When insuring something as valuable as your home, it is important to understand the coverage you’re getting rather than purchasing a California Home Insurance policy solely on the price. During these hard economic times nearly everyone wants to save us much money as possible but let’s not forget that being underinsured at a time of a loss will financially cost us our most valuable asset. Check to see if your policy contains the following important features.

Does it provide coverage for extra costs resulting from building code changes?
Does it automatically increase coverage limits each year to keep up with inflation?
Does it pay the full replacement cost if your home is destroyed, even if that cost exceeds policy limits?
Does your insurance company guarantee repairs paid for by your homeowners coverage?

Most Home Insurance companies will stand behind work performed by contractors affiliated with their Guaranteed Repair Program for as long as you live in your house. Take advantage of these coverages and rest assure that your family is well protected.

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