Over the past several months, Kentucky has experienced a significant amount of severe weather. The December tornadoes that swept through the western and central parts of the Commonwealth devastated several communities, causing widespread loss of life and property damage. Earlier in the year, Kentucky also experienced powerful ice storms causing falling trees and power outages.

During these times, we are reminded to ensure that our home insurance is up to date and covers our needs.

To complicate matters, the cost of building a home – referred to as the “rebuild cost” in the insurance world – has increased dramatically recently. According to the National Association of Home Builders, the costs of lumber and other building materials have risen so much that the cost of building a new single-family home has increased by $18,600 in just four months starting Dec. 29. 2021. This is a problem. for owners, particularly with regard to their home insurance.

Most homeowners insurance policies are what are called “cost new” policies, which means that the insurance company is responsible for paying the cost of rebuilding your home — not just paying the market value — in the event of a covered loss, such as wind or fire. However, this replacement cost coverage still has a limit.

For example, your home insurance may cover the replacement of your home, up to $200,000. It might have been acceptable two years ago, but today your home may cost $250,000 or more to rebuild. If you have a covered loss, your home insurance may not have enough coverage to rebuild your home.

A recent review of a homeowner’s policy showed that a home was covered for $80,000. According to calculations, it would take about $240,000 to rebuild his house. Strong recommendations were made for certain changes to his home insurance.

A review of your home insurance can save you a big headache when it comes time to file a claim.

Andrew Sargent is an insurance consultant with the Wright Legacy Group.

Andrew Sargent is an insurance consultant with the Wright Legacy Group.