How well do you understand your insurance? A primer for homeowners

Property owners are understandably frustrated when their insurance provider offers reimbursement that doesn’t match the cost of repairs and recovery. But that’s nothing to the distress they feel when they realize their insurance policy doesn’t actually provide coverage for the damage and losses they’ve experienced.

As a public adjustment company, we’re experts at negotiating with insurance companies to get property owners the best possible settlement. But that settlement will be limited if the coverage is lacking in the first place. Before a problem arises, take a good look at your insurance policies and be sure you understand what they include and exclude.

These are some common areas of confusion:

Actual value vs replacement value

When setting the amount of coverage for your home, remember that your insurance is there to help you cover the cost of repairing and rebuilding your property. The past or present market value of your home may not reflect the expense of rebuilding in today’s market.

It’s not unusual for rebuilding to cost more than 30-40% more than new construction, whether because of older construction techniques, the need for demolition and debris removal, or even the labor of matching new materials to the existing structure.

The cost to rebuild

Your insurance coverage may not have kept up with the skyrocketing costs of labor and materials since 2020. Inflation in the price of building materials hit all-time highs in 2022, from a 21% increase in the cost of lumber to a 113% increase in the cost of steel.

While inflation has slowed in 2023, prices are unlikely to see a significant drop, and most materials will keep increasing by about 6.5% per year. Meanwhile, the construction industry faces an extreme labor shortage, making both skilled craftspeople and general laborers harder to find and more expensive to pay.

Natural disaster coverage

Insurance customers are often surprised to learn that standard homeowners insurance may not cover some causes of damage. Depending on where you live, your insurer may specify that it does not offer insurance for flooding, ice, hurricanes, wildfires, or earthquakes.

Those exclusions may also include damage from causes secondary to natural disasters, like a sewer line backup or mold growth. Take time to understand what is included in your policy and the biggest risks in your area. Often, you can purchase additional insurance for specific hazards or types of damage.

Code compliance

Older homes have likely developed some charming quirks that wouldn’t fly if the house were built today. Fixing those quirks is up to the homeowner—unless the home is damaged and rebuilding is required. In many states, homeowners are required to bring their property up to modern building codes during repairs, which could involve electrical work, plumbing, ventilation, and roofing.

Some cities maintain their own policies, which can be stricter or may grandfather in older properties with historic appeal. Some communities have established requirements for energy-efficient appliances and even the ability to support solar panels. And those rules can change before you change your insurance policy! As with natural disasters, you need to assess the risks specific to your home and compare them against your insurance policy.

Get the coverage you need

As a public adjuster, I regularly work with contractors with firsthand knowledge of construction costs and building codes. Too often, I see customers who are underinsured for the cost of repairs and the risks to their property.

I would be happy to apply my knowledge and experience to a comprehensive review of your insurance policy. I can help you feel confident that you know exactly what’s covered in your current policy, then consider whether, based on the age, location, building materials, and contents of your property, you should add further coverage for specific needs or risks. Because I represent property owners, not insurance companies, my only interest is to help you find the coverage that fits your situation best.

Please contact me or call 774-239-6822 for a no-obligation meeting to discuss our services.