Protect Your Home: Update Your Insurance Coverage
Owning a home is a blessing. It fulfills basic human needs, like shelter. It gives you a place where you can let down your guard and be yourself. It is also the biggest asset for most Americans and allows you to build wealth that can be passed onto future generations. There is a reason why owning a home is a corner piece of the quintessential American Dream. Anything this important deserves to be protected properly. That is why homeowners insurance is important. Life is complex and unpredictable. Things go wrong unexpectedly, and when they do, you need to be prepared to fix them. Homeowners insurance helps make you whole if you experience a loss. But, if your coverage is not up to date, then you can be left in a world of financial hurt. Here are some things to consider to make sure your home has the proper coverage.
Make Sure Your Home Value is Accurate
The 2020 real estate market has been red hot. Demand for buying a new home has been sky high because mortgage rates have been at historic lows. Meanwhile, the supply of homes has been very limited because of the pandemic. The low inventory of homes available to buy combined with a large demand to buy new homes, has sent home prices sky high. Homeowners have greatly benefited from this formula in 2020. In fact, homeowners in the United States have seen home prices rise by over one trillion dollars. Even people who have purchased homes earlier in the year have already seen the value of their homes increase. This has increased the amount of equity for homeowners across the country.
While rising home prices are fantastic for homeowners, they open up the possibility that your insurance coverage is outdated. The amount of coverage you have for your home in your homeowners policy is based on the value of your home at the time your policy went into force. If your home value has increased since you purchased your homeowners policy, then you are likely not fully covered in the event of a total loss insurance claim. This means that in the event of a large claim, your homeowners policy will not make you whole as it is intended.
In order to make sure your home is covered at its current value you need to update the value of your home with your insurer. There are multiple ways you can go calculate your home’s value.. One way is to get a home appraisal. This will give you an accurate reflection of your home’s current value; however, it will cost you money to get appraised. The other way to get your home value is to get a comparative market analysis. Your realtor can help you with this. If not your realtor, then your trusted mortgage broker can help you. One of the benefits of working with an independent mortgage broker that cares about your needs is that they can help you with more than just your loan. When we take on a client at Peoples Choice Mortgage, we care about their wellbeing long before signing mortgage papers and long after.
Make Sure Your Home Improvements Are Covered by Your Homeowners Policy
Many people chose to take advantage of the pandemic by undergoing home improvements and upgrades that they have wanted for a long time. It makes sense. Many of us are spending more time at home than ever before, so we might as well make our home as enjoyable as possible. Furthermore, many people have been using their increased home equity to fund these repairs. One of the benefits of having equity is being able to use it. Some people have funded their home repairs and upgrades by taking out a home equity loan, especially if the upgrades are significant.
Getting the kitchen, bathroom, or patio you have always wanted is a dream come true. However, if your homeowners policy does not cover these upgrades then a total loss insurance claim could be your biggest nightmare. This is where it is important to take a look at the replacement cost for each of your upgrades and improvements. Oftentimes, it is more to rebuild a home than it is to buy a new one. This is especially true if you have a bunch of custom elements. Check with your insurer after you have done a home improvement project to make sure that your coverage will adequately cover the work you have done.
You also want to make sure that your homeowners insurance covers any additional structures. Because of the pandemic, people have found creative ways to add more space to their existing homes. People have accomplished this by adding sheds, granny flats or other structures to their property. These additional structures are not covered in your standard homeowners policy. Additional structures, such as the ones listed above, and even others like fences or decks, need to be added one-by-one to your homeowners policy. Even if the total value of your home is covered by your policy, you will not be compensated for these structures if they are not specifically itemized.
Final Thoughts
For millions of Americans their home is the most important asset they have in their lives. As such, it is important to make sure that is protected in every manner possible. Your homeowners policy can help pick you up when disaster strikes. However, if your home, its items, and its value is not accurately reflected in your homeowners policy, then you are open to headaches and financial losses.
If you have questions about your homeowners policy, speak to your insurer right away to make sure you have the proper coverage. If you have questions about your home’s value, then reach out to your trusted mortgage broker or realtor. If you are a homeowner that has been fortunate enough to see the value of your home rise and are curious about your current mortgage, contact us! The team at Peoples Choice Mortgage would love to help you determine if your current mortgage is right for you or if there is a chance to qualify to refinance your loan.
