Rising home values require greater insurance coverage

Author:
Francis Grandieri

In all likelihood, your suburban home is worth more than it was just one year ago. It’s one of the few benefits produced by a pandemic that has turned our world upside down.

There are a number of factors creating this spike in real estate. Housing supply is low and mortgage rates are lower. People are fleeing city congestion for suburban and rural space. And workers who are no longer tied to city commuting are remotely and happily working at home.

But with this added value comes rising replacement costs. That means, in the event of a fire, flood or storm damage, for example, your more valuable home may cost significantly more to repair. This new reality has triggered higher home owner’s insurance premiums in many areas of the country.

No need to panic. Consult with your Montgomery agent to revisit your home value and its replacement cost, as they are different. Replacement value, as the Homeowners Insurance Guide states, is a measure of the cost to hire someone to rebuild your house, repair the damage or replace your furniture.  

And when we do chat, your agent will focus on those key items that often lead to higher premiums — such as material inflation, an aging roof, inefficient HVAC system or those oak trees that taunt you in a wind storm — and we’ll ensure you get comprehensive yet affordable protection against these unexpected events.

Water damage in a home is particularly troublesome. Roughly one in 50 homes will have water damage each year, according to the Insurance Information Institute. Water damage can be caused by a number of events, including frozen or burst pipes, storms, faulty plumbing, accidental sewer backup or overflow and, of course, floods.

While this may sound threatening to your annual home owner’s insurance premium, it really isn’t. Liability limits on our policies are inexpensive, as you may be able to double your limits for just a few dollars more each year. Montgomery always recommends homeowners increase liability limits to protect against sewer, drain and overall water damage.

Then there’s this important note. As Montgomery has a marketplace of insurance partners and solutions at its reach, we’re always aware of those companies exposed to geographical risks. That means, for example, your home will not be insured by a California-based company under the financial stress of year-long wildfire claims. It’s just one more way Montgomery’s independence delivers value to its neighborhood customers.

Finally, a recent CNBC report claims about two-thirds of American homes are underinsured. That figure will only spike higher as the insurance industry factors in this sudden rise in home values. Don’t be that guy! Reach out to your local Montgomery agent at 610-565-8280. Your agent will help you assess your home’s current value and the insurance coverage you need for the peace of mind you deserve.

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