The Importance of Updating Your Property Insurance Values
With the growing inflation concern, largely resulting from a culmination of labour and supply trends brought on by the COVID-19 pandemic, it’s important to review your property insurance coverage.
Increased prices for building materials mean the cost to have damaged property reconstructed could now be much higher than the value stated in your policy. This change could result in significant, unexpected expenses for you, the property owner.
Know Your Estimated Replacement Cost
Now is the time to ensure that your property insurance policy limits correspond to the cost to rebuild. Unlike a property’s resale or market value (which includes the price of the land and fluctuates based on the real estate market), the cost to rebuild is determined based on the amount needed to hire a contractor and purchase building materials as well as other related expenses.
What is Market Value?
The market value of your property is the amount a buyer would pay for it, including the land, no matter how much rebuilding would cost. Market value is not the same as replacement cost and is not used to determine the replacement cost.
What is Replacement Cost?
Replacement cost is the amount necessary to replace the building itself. It does not include a cost for the land on which the building sits since that land will still be there.
How do I Determine Replacement Cost?
To determine the replacement cost of your home or business property, speak with someone at CMB insurance brokers.
What else might need updating in my property insurance policy?
Once you’ve updated the replacement value in your policy, be sure to inform us with specifics when making improvements – for example, if you’re installing a whirlpool tub or if your countertops have been upgraded to marble. It all adds to the value of your home.
Have other questions? CMB Insurance Brokers is ready to assist you in the process of determining the value of your property and purchasing the right coverage to protect your investment. Call us at 780.424.2727 or click here to get a quote.