You probably think about your homeowners insurance once a year—when the renewal arrives and the premium changes.
But when was the last time you looked at how much your home is actually insured for?
I recently had a conversation with a client that really stayed with me.
Her mom’s home was destroyed in a fire. Thankfully, she had homeowners insurance.
But there was a problem.
Her policy had not kept up with the current cost of rebuilding the home.
The policy had been in place for years, while construction costs and the home itself had changed.
When disaster struck, the difference became painfully real.
It was a reminder that simply having homeowners insurance doesn’t necessarily mean you have the right amount of coverage.
If you’ve owned your home for several years, here are a few things worth checking.
1. When Was the Last Time You Reviewed Your Coverage?
Life changes. Homes change. Construction costs change.
Maybe you’ve renovated your kitchen, finished your basement, added an addition, upgraded your bathrooms, or made improvements to your outdoor spaces.
Or maybe you haven’t changed a thing.
Either way, it’s worth asking your insurance professional:
“Is my current dwelling coverage still appropriate for my home?”
2. Know the Difference Between Market Value and Replacement Cost
This is an important distinction.
Your home’s market value is what your home might sell for today.
Your replacement cost is what it would cost to rebuild your home after a covered loss.
Those numbers are not necessarily the same.
Your homeowners insurance doesn’t simply need to match your home’s current market value. Your insurance professional can help determine the appropriate amount of dwelling coverage based on rebuilding costs and the specifics of your home.
3. Pay Attention to Improvements
Have you made improvements since you purchased your home?
Think about:
- Kitchen or bathroom renovations
- Finished basements
- Additions
- New flooring or higher-end finishes
- Decks, patios, or other outdoor improvements
- Custom features
Make sure your insurance professional knows about significant improvements that could affect rebuilding costs.
4. Don’t Forget About Rising Construction Costs
Even if your home hasn’t changed, the cost to rebuild it may have.
Labor and material costs can change over time.
That’s why reviewing your coverage periodically is important—not just assuming that the policy you purchased years ago is still sufficient today.
5. Know How Much Equity You’ve Built
There’s another number every homeowner should know:
What is my home worth today?
If you purchased your home years ago, you may have built substantial equity through a combination of appreciation and paying down your mortgage.
For example:
Estimated Home Value: $1,250,000
Estimated Mortgage Balance: $475,000
Estimated Home Equity: $775,000
Knowing these numbers can be useful for financial planning, future moves, refinancing decisions, and simply understanding where you stand.
6. Get a Fresh Look at Your Home’s Value
This is why I’m offering a complimentary Home Value & Equity Review to my clients and friends.
I’ll prepare an updated estimate of your home’s current market value and, if you provide your approximate mortgage balance, an estimate of your current equity.
It’s not an insurance appraisal—and I’m not determining how much insurance you need.
Instead, I’m giving you current real estate information you can take to your insurance professional and use as part of a broader coverage review.
The Bottom Line
Your home is probably one of your largest financial assets.
Don’t wait for a fire, storm, or other unexpected event to discover that your insurance coverage hasn’t kept pace with your home.
Take a few minutes to review your policy with your insurance professional.
And while you’re at it, know what your home is worth today.
If you’d like a complimentary Home Value & Equity Review, call, text, or email me. I’d be happy to prepare one for you—no obligation, just good information to have.
