Released: February 25, 2019

Help Desk FAQ

How do I make sure I have enough insurance to rebuild my home?

Homeowners sometimes find themselves underinsured, with not enough coverage to rebuild their home after disaster strikes. To make sure you are always fully protected, it's important to make sure that you regularly reevaluate the cost to rebuild your home and make sure you increase your insurance coverage if necessary.

Don't assume that the amount of your mortgage or the price you paid for your home—or even the current market price—reflects the actual cost to rebuild. This cost should be based on an in-depth evaluation of your home, from the types of construction methods and materials used to the types of improvements you have made to changes in construction/building codes (that will require upgrades if you rebuild). Inflation will play a factor in the cost of rebuilding your home today compared to when you purchased, as will a temporary increase in consstruction costs following a major disaster (such as a wildfire, earthquake or flood).

As the Insurance Information Institute explains, a guaranteed replacement cost policy will pay whatever it costs to rebuild your home as it was before. An extended replacement cost policy will pay an extra 20 percent above the limits (possibly more, depending on the insurance company).

Contact your insurance agent or company to discuss your coverage current coverage and if any changes are needed to better protect you.

Learn more about insuring yourself at the III website.