I was recently asked by a friend to explain why the amount of insurance coverage owner is so different from the tax value and market value in the region. I bet there are many of you ask the same question there!
We all know that many states have seen large fluctuations in the value of properties in the market. While they peaked in 06, some market values have since sunk to levels far below the actual cost of replacing the house. Contrary to the market value, which is based on what the house and lot would sell in a given area, the replacement cost of your home depends on the current price of building materials such as wood, concrete, roofing, and shingles and fresh workforce. The quality of your home is also a big variable that is not always fully recognized in the market value of the house. flooring, bathroom accessories, cabinets, trim, and countertops can quickly add additional replacement costs
According MSB / Boeckh and new BNi-Building, the cost of building materials rose by percentages following in 2013 .:
- Lumber: 8%
- Dry-Wall: + 25%
- Concrete: 6%
- hand -d'œuvre qualified: 3-4%
- PVC and adhesives: increase in variable cost increases due to the crude oil
another issue often overlooked when considering clean owner of coverage limits is that the reconstruction of an existing house is usually more expensive than building a new home. Demolition and debris removal are expensive. In addition, the construction crew to work around existing utilities, structures, landscaping, and remaining in good structural condition. Economy of scale economies when many houses are built at the same time on the same street is lost. In other words, the construction of a new home is much more effective and can be done quickly at a lower cost.
Because some homeowners policies may be approved to include an increase in the amount of coverage above the Coverage A limit, it is very important that the estimated replacement cost is accurate and reflects the latest labor and material costs in a given area. Home additions, improvements and renovation projects should also be reported to your insurance agent, because they will affect the right amount of coverage needed.
If you have not seen the value of your house lately, or if you have made some improvements to your home, contact your independent agent and request an estimate of replacement cost.
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