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Insuring to value: The 100% solution

Here’s an important question to consider. If your home was destroyed by fire, or another type of loss covered by your homeowners insurance, would you have enough coverage to rebuild it?

“Insurance to value” is the phrase the insurance industry uses to describe the amount of insurance needed to build a replacement of a home that has been completely destroyed. This value is different than your home’s market value. Replacement value takes into consideration various costs and conditions that probably were not present when your home was originally constructed.

Replacement cost factors
Several factors can impact the cost to rebuild your home, including:

• Demolition and debris removal—Before construction can begin, the damaged portions of your home must be removed. And sometimes even undamaged portions must be removed to allow other sections to be rebuilt.
• Increased cost for building materials—When new homes are built, the contractor often has several homes under construction at once, allowing for the purchase of large quantities of materials. Rebuilding projects don’t benefit from this economy of scale.
• Labor costs—Electricians, plumbers and other construction workers are often assigned by a contractor to work on more than one new home at a time, depending on each home’s stage of construction. This efficient use of labor scheduling is not possible when rebuilding a single home.
• Changes in building codes—Current building codes for wiring and plumbing must be followed if your home is rebuilt. This may mean updating undamaged portions of your house, as well.

Making sure you’re insured to value
Your agent and Allied Insurance work together to arrive at an accurate replacement value for your home. Allied uses the information you provide about your home, plus construction cost data provided by third-party inspection companies.

We recommend you insure your home to 100 percent of its replacement cost. This qualifies you for Allied’s Dwelling Replacement Cost coverage. The coverage offers extra protection against inflation by extending your homeowner policy’s dwelling coverage (Coverage A) to 125% of your home’s stated replacement value.

Regularly reviewing your homeowners coverage is important to ensure you have enough coverage to rebuild your home in the event of a disaster. This is especially important if you have done any remodeling such as finishing a basement or adding a room. Call or visit your Allied agent if you have any questions about whether your home is fully protected.