When taking out a Tampa home insurance policy you may think that the limit for the dwelling coverage is based on the property value of your home. Instead, it actually should be based on the cost to rebuild your home—a significantly different number.
Many people don't realize that the appraised value of their home could be totally different from the home’s rebuilding costs. The appraised value takes into consideration your home as it currently is along with the real estate market as a whole in your area. But rebuilding a home takes materials and manpower that will be priced based on many different factors, all of which are variable. For example, depending on current output for homebuilders, the cost of materials to rebuild a home could be quite high whereas in a depressed housing market they may be lower. Unfortunately, if your limits don’t take this fluctuation into account, you could quickly find yourself underinsured.
Another consideration in the cost to rebuild your home is any change in codes that may have taken effect since your home was originally built. As codes requirements become more stringent it may become more expensive to rebuild.
It's important to remember that the cost to rebuild your home is not a static number and to periodically check for potential changes in rebuilding costs, such as the costs of materials and labor which can change many times throughout the year. It's impractical to check the cost to rebuild monthly, but you can ensure that you check it annually before your home insurance policy is renewed and then assess the value of making adjustments.
If you aren't sure how to estimate rebuilding costs for your home or you have other questions or concerns about your home insurance policy, give us a call 866-933-6691. We can ensure that your home insurance policy offers you the coverage you need with minimal gaps and we can help you determine more accurate limits so that you get a sufficient benefit after going through an insurable incident.