Limited Replacement Cost is a Problem
Recent construction inflation numbers indicate that material costs have risen by an average of 36% nationwide! 36% is a problem for many homeowners who have chosen a basic HO-3 insurance policy form that includes the Limited Replacement Cost endorsement.
Here is why!
There are many homeowners that buy insurance through nationally recognized insurance companies. Their policies include a building replacement cost endorsement that puts a limit on reimbursement of no more than 25% of the limited listed on the current policy.
As an example, if your home is insured to be rebuilt for $2,000,000 a Limited Replacement Cost endorsement would pay no more than $2,500,000 if your home was destroyed by fire.
That’s a serious conflict if material costs are rising by 36%!
The alternative to a Limited Replacement Cost endorsement is a premium insurance policy with a Guaranteed Replacement Cost endorsement where there is no conflict. What it costs is what is paid!
Yes, a premium contract and Guaranteed Replacement Cost may be more premium, but it seems a small price to pay for what, for many, is their single largest asset. Why scrimp?
If you would like to compare a Basic Home Insurance pricing with a premium contract with a company like Chubb or PURE, drop Kyle an email to get the intel at kshepard@shepardinsgrp.com or call 203.698.9342.
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