Do You Have Enough Home Insurance Coverage?

Consider the cost of rebuilding to avoid being underinsured.

Does your homeowner policy have sufficient coverage limits to help you recover fully after a loss? It’s a question many people don’t ask, and if they have a claim, it can leave them with unexpected expenses. Due to fluctuating material costs, it may be time to ask your independent insurance agent to review your policy. Agents have the software and knowledge to evaluate your risk, and you may find your risk is higher than you think.

Your homeowner policy includes a coinsurance provision that requires you to insure your home for a specified percentage of its full value. If the limit of coverage on your home does not meet this requirement, your policy will not pay the full amount of the loss.

Factors Impacting Replacement Cost:

Rebuilding costs

Rebuilding a home is more expensive than building from scratch. Ease of site access, building codes and economies of scale all play a part.   If your home needs to be rebuilt, cleaning up debris and using heavy equipment in a developed neighborhood can be expensive and take longer than building new.

Scarcity of resources

After natural disasters, the demand for labor and materials often exceeds supply, causing costs of both to increase.

Age of the home

Homes built prior to 1945 typically have much higher reconstruction cost due to retrofitting of materials or requirements to bring systems up to code.

Evaluate the kinds of insurance you need. Your agent can determine if you are adequately covered for events that are likely in your area, such as earthquake, flood and wind damage. Remember to ask if separate deductibles apply for these high-risk losses. Some policies require much higher deductibles for these events. If this is the case, create a plan to finance those deductibles should you need it.

This loss control information is advisory only. Not all exposures are in this article. Contact your local, independent agent for insurance coverage advice and loss control information. Neither The Cincinnati Insurance Company nor its affiliates or representatives offer legal advice. Consult with your attorney about your specific situation.

The selection of a particular service provider is the independent choice of the policyholder. Service providers are not affiliated with The Cincinnati Insurance Companies. Cincinnati and its employees make no warranties and assume no liability for services, products or loss control measures provided by service providers.