Komar Insurance Agency Farmers Insurance Group Silverdale, Poulsbo, Bremerton
If your home burned down tomorrow, you would get enough money from your insurance company to rebuild your house exactly as it is now, right? Well for better than 2 out of every 3 homeowners, the answer to this question is a resounding,”NO!”
Is My Home Underinsured?
By Steve Komar
Komar Insurance Agency
Farmers Insurance Group
If your home burned down tomorrow, you would get enough money from your insurance company to rebuild your house exactly as it is now, right? Well for better than 2 out of every 3 homeowners, the answer to this question is a resounding,”NO!”
According to a survey by Marshall & Swift / Boeckh, a Princeton, N.J., company specializes in estimating construction costs, the typical homeowner is underinsured. Why is this a big problem? Well, the latest survey showed the typical homeowner was underinsured by an incredible 27%. If you fall into that group of 66% who are underinsured, you could be on the hook for almost 1/3 of the cost to rebuild your house. If your house costs $200,000 to rebuild, you could be responsible for almost $70,000
How and why is this happening?
There are many reasons why this has happened, and it isn’t a new phenomenon. Insurance policies don’t always cover the full value of the house. There was a time when insurance companies would rebuild your home no matter the cost or your policy limits. Today, most insurers cap how much they pay of your policy’s stated coverage amount. Generally, that number is 115% - 120% of the policy value. This means that if your policy limit is $200,000, then the insurance company usually will pay up to $240,000 to rebuild your home. Check the language in your most recent policy renewal to see if you have “extended replacement cost.”
Construction costs continue to rise. According to the National Association of Homebuilders, from 2002 to 2005, the average price per square foot for building in the West jumped from $89 per square foot to $115. That’s about a 30% increase in rebuilding costs as well. The lesson here is to get your insurance updated on a regular basis.
Remodeling, adding on, and updating. As the housing market has cooled, many homeowners have decided to remodel and update their homes. From remodeled kitchens and bathrooms to adding on new rooms, remodeling of homes has exploded in the last few years. Unfortunately, most homeowners fail to update their insurance coverage to reflect those improvements. Updated bathrooms and kitchens can add tens of thousands of dollars to the rebuilding cast of your house in case of fire.
How do I avoid being underinsured? Meet with your insurance agent on a yearly basis. Have them review your current coverage to make sure that your house is properly covered. Steve Komar is the owner of the Komar Insurance Agency in Silverdale Washington servicing Poulsbo, Silverdale, and Bremerton Washington. If you have any questions or are interested in a free insurance review, feel free to contact the Komar Insurance Agency at
