Most people understand that improving their home leads to a higher value of the property. Finishing the basement or building a new garage out back to house the new RV makes the home more attractive and also worth more than it did before. Unfortunately, a lot of people forget to take that newly increased property value into account when they look at their annual homeowner’s insurance bill. What might have been a reasonable replacement value policy before adding all of the new improvements might turn out to be woefully short in the event of a serious fire or natural disaster such as a hurricane or an earthquake.
The amount specified by the original policy is probably only sufficient to pay for rebuilding the house to its original condition. This means that some unlucky homeowner ends up flushing all the money spent on improving his property right down the toilet when misfortune strikes. There are, of course, policies that automatically guarantee the cost of replacement, no matter how much the bill is, but these policies are only in force for the property as it existed at the time the policy was written. New additions and improvements are not automatically included.
It is therefore extremely important for homeowners to make completely sure that the new value of their property is reflected on their policy. The difference in monthly premiums is startlingly small, and this insignificant sum should not be allowed to stand in the way of preserving all of one’s assets in the event of an actual emergency. Many homeowners sweat and save for years to build up the cash necessary to create the home of their dreams. They should not let a foolish accident or an oversight put them back right where they started on the day they first bought their property.
This article is provided by writers at iowahomeinsurance.com.