Make sure the insured value of your home
keeps up with your home remodeling plans.
While stuck indoors this winter, did you look around and plan any home projects? Whether you do it yourself or hire a contractor, remember to update your homeowner insurance as you increase your home’s value.
The Coverage A limit on your homeowner policy is the amount of insurance you have to reconstruct your home in the event of a total loss. All costs associated with replacing or rebuilding your home are considered when developing this Coverage A limit. When you make changes that increase the value of your home, you may also need to increase the coverage limit.
Reconstruction cost is the cost to hire a contractor to replace the home as it is, in today’s marketplace, using materials and design of similar quality. Determining the reconstruction cost of your home can be a challenging and complex process. In most situations, reconstruction cost does not reflect the market value, tax assessor value or the initial construction cost of the home – even on a new home.
Construction industry statistics indicated that there was a downturn in home improvement expenditures after the recent economic recession. But now, things are starting to turn around.
Bill Shaw, GMR, GMB, CGP, a remodeler from Houston and chairman of the National Association of Home Builders Remodelers, recently commented that 2013 ended on a high note for remodelers. (See: “Remodeling Market Index Steady at Historical High.”) “We expect to keep this positive momentum going in 2014 as more homeowners will continue to take on remodels and repairs that had been postponed in the downturn.”
As you plan your next project, take an inventory of your home’s new features. Consider interior changes as well as exterior. Does the addition on your home have a different roof material than the rest of your home? Does the new deck you built include a kitchen, built-in grill or electric fireplace? Is your contractor making time this winter to install built-in bookshelves and TV cabinets? Are you finishing your attic area to create an extra bedroom? Did you upgrade your windows?
You may put lots of time into picking out countertops and appliances for your new basement kitchen, type of wood for cabinetry, color of brick to match the original portion of your home, quality of decking materials and other factors. Remember to share these important …read more
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