Hello, I’m David Doyle at Wilber-Price Insurance Group. We’d like to take a moment today and talk about a question we get quite a bit revolving around homeowners insurance and that’s, “David, I think I’m over insured.” And where’s that question coming from? And there’s really three numbers that we want to look at. The first number is the number that the county uses for your taxes. Every county uses a different formula and they put together a taxable value of your home. You honestly want that number to be as low as it can be because that’s what you pay taxes on.
The second number would be you call your realtor and I’m going to pull some numbers out of the air. Let’s say that taxable value was $100,000. So you call your realtor and say, “Hey, what can I sell my home for?” And the realtor says, “Well, based on the age of your home, based on your carpet and how old your kitchen cabinets are and things of that nature, you know what, I think I can get $150,000 for that home.” That’s called the market value. What will the market pay for my home?
You then open your insurance policy from Wilber-Price, and it says you’re insured for $200,000. And you think, “Why am I doing that?” Well, it’s really pretty simple. That $200,000 is what’s called replacement cost. What’s it going to cost to build my home back with today’s materials, today’s labor, everything new? So it’d be easy to understand why that number is going to be $200,000. And that’s really, again, the amount of coverage that you want because you want your home put back.
Just about every insurance company uses the Marshall Swift/Boeckh construction cost estimator. It takes your square footage, number of bedrooms, number of bathrooms, how big your kitchen is, how many car garage, all of that together and puts it on a chart and says, “This is what it’s going to cost to build it back.” And they’re pretty accurate.
Most insurance companies also offer a buffer, 25% or 50%, and where that’s important would be that tornado comes through and hits your house and the neighbor’s house, and three other houses on the street, down the street, next block, et cetera. A lot of homes damaged. What’s going to happen in that situation is now lumber, the cost of lumber, just went out the ceiling, as well as the labor. So with a 50% buffer, your $200,000 policy will actually go all the way up to $300,000, 200 plus 50%, to put your home back, put it back at full replacement costs like you want.
I hope that answers your questions. Call the office, we’d be more than happy to go through it some more with you, answer any other questions that you’ve got. The ultimate thing is for you to have the right amount of coverage and enough coverage to put you back in a new home. Thank you for your time and Wilber-Price thanks you for your business. Have a good day.
Call Wilber-Price Insurance Group in Loveland at (513) 239-8610