The news headlines about the increase in building costs have been plentiful over the last few weeks. This time last year building a deck on the back of your home was about two-thirds less expensive than what it is today. As a result, there have been phone calls into the Insurance For Texans world headquarters wondering how this might affect their home insurance policy and it is a great question to be asking. So let’s take a look.
Do Building Costs Matter In Texas Home Insurance?
The single most important thing that a Texas homeowners insurance policy does is to make sure that your home is replaced in the event that it is destroyed whether that be by fire, tornado, or truck running it over. Therefore, the first thing that an agent at Insurance For Texans does when evaluating a home insurance policy for you is to determine the potential cost to rebuild your home in the event of a total loss. This process determines your dwelling value of the policy and is the money that would be available to you to rebuild your home if the unthinkable occurs to your family. This means that building costs do absolutely matter in Texas Home Insurance. Violent and large changes in the cost to rebuild mean that you could be left holding the bag to finish out a rebuild of your home if your dwelling value is not high enough to cover it.
What Happens In A Rebuild If I Run Out Of Money On My Dwelling Value?
In the current market conditions, it’s really difficult to know how high that building costs can actually go. Which is scary for an insurance agent and keeps us up at night. So what can we do? First things first. Your Texas home insurance policy written with Insurance For Texans will have a provision in it known as “Extended Replacement Cost”. Extended Replacement cost is typically a percentage of your dwelling value and is used to cover cost overruns that might occur in a rebuild situation. That percentage ranges from 25% to 100% depending upon the carrier and the selection that you make at the time of purchasing it. Times like right now when costs are skyrocketing is exactly why this provision is included in your policy.
Is There Any Action That Texas Homeowners Need To Take Today?
It’s always a great time to do a review of your current policy coverage to make sure that you have adequate and appropriate coverage. Over time, we make updates, add items, and improve the condition of our homes. When we do these things, it can increase the amount of money that would be required to rebuild our homes. As a result, the dwelling value that was appropriate several years ago is likely not adequate today. When you also take into account the inflation in building costs that we have seen, it is highly encouraged to re-evaluate if you have enough coverage in your dwelling value limit to rebuild your home. Relying solely on the Extended Replacement Cost to cover this gap is not a reliable plan.
As a result, having a review of your policy to make sure that you have enough coverage at the best price possible is what we recommend. As an Independent Insurance Agency, Insurance For Texans has the tools available to make sure that your coverage meets your needs and shopping the entire home insurance marketplace means that you can do so at a competitive price point. Don’t get caught with a big rebuilding bill and allow us to review your policy today! Click the image below to get started with your review.