Owning a home may be your biggest investment yet, so of course you understand the importance of homeowners insurance, but what you may not recognize is the types of insurance by which to protect your home. There is dwelling coverage as well as market value coverage but knowing which is best for you is essential. The emphasis on home values when buying or selling a home is typically centered on “market value”, but is this the best type of home insurance you need to have right now?
Dwelling Coverage Versus Market Value Explained
Since the Pandemic, home values have considerably been on the upswing. We are now in a “seller’s market” due to varying reasons such as pandemic impact, inflation, and increased costs of lumber (to name a few). Because of this you may find the market value of your home is below the cost to rebuild. The “market value” is what you could buy your home for in the current housing market. This is typically established by comparing your house to others sold in the last year (in your area) that are similar in size, construction, and curb-side appeal.
“Dwelling coverage” is established as the estimated cost to rebuild your home. As you may imagine, most insurers prefer to insure homes for the dwelling value.
Imagine experiencing a catastrophic fire loss to your home and finding out your home is only insured for market value. The fire was so devastating you will need to rebuild. However, the cost to rebuild your house, due to lack of materials, decrease in the work force, lack of skilled laborers, increase in lumber, and rising inflation, will leave you in a coverage gap. To rebuild, you may have to settle for lower grade materials than what you have grown accustomed to. Therefore, it is recommended you contact your local Alabama independent insurance agent to discuss your current insurance protection for your home.
Dwelling Coverage Benefits
Realtors establish the value of your home based on the current housing market, but if you find yourself in a situation where you need to rebuild, you will not be able to rebuild your house for that amount. Therefore, it’s essential your home be protected for the cost to rebuild, should you find yourself in the situation of a catastrophic loss. Losses can and do happen and you must be prepared.
Insuring your home for dwelling coverage also includes debris removal after a covered peril that renders your home a total loss, as well as demolition of any undamaged areas of your home/building.
Burkett & Associates Understands All Your Homeowner’s Insurance Needs
Our job at Burkett & Associates is to make sure you are adequately protected for perhaps your biggest investment. If something catastrophic happens, you need to have the right insurance protection. We recommend meeting with us every three to five years to assess your home’s replacement cost value. Finding out after the loss that you are inadequately insured can be financially devastating. We are here for all your Alabama homeowner’s insurance needs. Don’t wait! Call us today at 256-704-7400.
