Insurance is an old industry. Through the many ups and downs of the Economy Insurance has been a way to balance risk within the real world. Lumber costs have recently seen a large increase due to demand, supply and transportation issues. You may look at your home’s replacement cost (rebuilding cost) and wonder if you are adequately covered in the event of a total loss.
Many policies these days have Extended Replacement Cost. Under a modern home policy form you should be covered up to the amount shown on your policy dec page. If you have an extended replacement cost endorsement you may be covered for 10%, 25% or 50% higher than your total replacement value. This is an additional protection in case you had added on to your home or building costs skyrocket. Check your current policy or ask your agent what your total replacement cost is.
When we write home policies we do initially calculate your homes replacement value with a replacement cost estimator. These estimators are built by companies who are always updating costs and pricing using market trends and forecasts. This means that even when hurricanes strike and create mass catastrophic losses we are prepared to rebuild the home you lost even if prices increase dramatically.
All this being said it is still a good idea to let your agent know when you add on that sun-room or remodel your kitchen. That helps your agent keep your policy current.