A Life-Changing Event
Our daughter and her family experienced a horrible life-changing event this past summer. They were making home improvements, replacing an interior door, and staining the door in the garage. They were using an oil-based stain. They did what we all probably do; they used an old T-shirt to stain the door. But we learned a very valuable lesson from this, so please learn from our loss here. Oil-based stains are combustible and more so in a high-humidity climate. In fact, the oil-stained rag burned a hole clean through the workbench and burned down their home beyond repair. Yes, fortunately, they were able to escape unharmed. Thank you, Jesus!
The firefighters shared that this cause of loss is all too common. Researching this issue further, we learned that one should seal an oil-based staining shirt in a container of water before disposal. We wish we had known that before. We certainly know it now. Now, you also know it.
Besides this valuable lesson on oil-based stains, we would like you to know something else...the importance of properly insuring your home.
Insuring Your Home to Value
Have you ever wondered what it means to "insure your home to value"? It's a crucial concept that can significantly impact your financial security in the event of a loss.
Insuring your home to value, simply put, is insuring it for the full replacement cost. Meaning if your house is insured to value and there is a loss, your house will be replaced in full. Whereas if you do not have it insured to value, you might only be paid out a pro-rated amount.
This does come with a higher premium for the higher coverage, but as we say, having the right insurance for when it is needed is worth the additional cost throughout the year.
What is Replacement Cost?
The replacement cost of your home is the amount of money needed to rebuild it to its pre-loss condition. This includes the cost of labor, materials, permits, and debris removal. It's important to note that replacement cost is different from market value. Market value reflects what your home is worth on the open market, while replacement cost focuses on the cost of rebuilding.
Why is Replacement Cost Important?
As property values and construction costs rise, especially in inflationary environments, it's essential to ensure your homeowner's insurance policy provides adequate coverage. Underinsured homes can leave you financially vulnerable if a major disaster strikes.
Taking Action
If you haven't recently reviewed your homeowner's insurance policy with your agent, now is the time to do so. Consider the following:
Recent Home Improvements: Have you added a room, renovated a kitchen, or finished a basement? These improvements can increase the cost of rebuilding your home.
Inflationary Impact: Rising construction costs and material prices can significantly impact the replacement cost of your home.
Natural Disasters: Your region's risk of natural disasters, such as hurricanes, wildfires, or earthquakes, can influence the necessary coverage.
By proactively reviewing your policy and ensuring it's adequately insured to value, you can protect your most valuable asset. Don't let a lack of coverage turn a disaster into a financial catastrophe.
Where to find help
Whitaker-Myers Wealth Managers cares about our client’s financial health. And part of a healthy financial situation is having the proper insurance(s) in place. The more you can learn and help protect yourself in an unfortunate situation, whether it be auto, health, or house insurance, we want to help you be the best prepared for any situation that could potentially derail your financial goals. Whitaker-Myers Wealth Managers is fortunate enough to be a part of the Whitaker-Myers Group. This team of professionals is equipped to help answer questions about coverage and provide quotes for you on multiple types of insurance.
If you have questions on types of insurance or would like to be put in contact with a member of the Whitaker-Myers Group to discuss options, reach out to your financial advisor today to start the conversation.
Insured to Value
November 21, 2024
Joe Mains
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