The increased costs of consumer goods have many people reevaluating their household budgets. But did you know that during times of inflation, you should be evaluating your homeowner’s policy coverage as well?
Many insurance policies are based upon the “replacement cost” of the dwelling. This calculation is based upon the amount of money it would take to completely rebuild your home in the event of a natural disaster.
Many of the components that would go into rebuilding your home, like lumber, doors and windows, roofing – even appliances – have increased in cost by double digits in the past few years. If your insurance coverage has not accounted for the increased value of your home or for the increased cost to rebuild, you could find yourself with significant out-of-pocket costs if your home is damaged or destroyed.
The Maryland Insurance Administration recently issued a Consumer Advisory on this topic, along with guidance on how homeowners can determine the reconstruction cost of their home. You can find that below, or at www.insurance.maryland.gov.