When it comes to insuring your home regardless of where you live: Iowa, Kansas, Kentucky, Louisiana, Michigan, etc., you need to have a thorough understanding of your home’s construction and various components. Since a significant aspect of your home insurance requires you to properly value the replacement cost of your property, you should have a good grasp on the true cost to replace your home. Remember, this is quite different than the market value of your home, which is what you would fetch if you were to sell your house. Instead, the replacement cost is what you would have to spend to rebuild your house or replace any damaged portions. In most instances, this is less than the market value as it does not include the price of the land.
First and foremost, you need to understand the cost to replace your main dwelling. The dwelling includes the house itself, any structures that are attached to the house, and the foundation of the home. Many homeowners often only value the replacement cost of their home on the basis of what is immediately visible to them. This method ignores much of what cannot be seen and is crucial in the rebuilding of a home. While it is often convenient to use an average cost per square foot in estimating the replacement cost, this method will sometimes leave you short.
If your home has any unique features that make it more expensive than average to rebuild, such as an indoor swimming pool, you must consider those costs. Sometimes a home may have very expensive upgraded fixtures. Every faucet and door handle is an expense that you need to factor in to your evaluation. If you have paid a significant amount to have your home upgraded with top-of-the-line materials, you will certainly want the same level of finish if your home ever needs to be rebuilt.
Another consideration is the geography of your home. If you live in a very remote area or if your house is difficult to access, the cost of replacement will be increased. For example, if your house is on a remote hillside or a small, private island, it will definitely cost you more to rebuild because there will likely be a time delay due to access. This will increase the cost of labor and materials, driving up your overall construction costs. As a result, you need to consider these factors when valuing your home for insurance purposes.
In addition to increased cost to rebuild, time delays will increase your reliance on the additional living expense coverage found on your home insurance policy. You should have an understanding of how long it will take to rebuild your home and ensure that your policy covers you sufficiently. The additional living expense is a critical benefit of your home insurance policy, but is also one that is easily overlooked. Do not make the mistake of assuming your home can be rebuilt in a very short period of time. Delays during construction are common and, if your home is damaged during a natural disaster, you will be competing for labor and materials along with many other homeowners who are in the same situation.
By taking the time to fully understand the time and cost involved in rebuilding your home, you can effectively insure your house and be covered for any potential losses.