Most policies are based on your home’s market value, not its replacement value, which takes into account the rising cost of materials and the increased demand (and cost) for labor and supplies. This goes for guaranteed replacement policies too, which are often capped based on the home’s insured value.
Gap #2: Insurance deductibles are out of control.admin_recoop2021-01-07T20:37:50+00:00
This is especially true for wind-related damage from tornadoes and hurricanes in high-risk areas. These disaster deductibles can be anywhere from 5-30% of your home’s value. For a $200,000 home, that could mean as much as $60,000. And that’s before your policy kicks in.
Gap #3: Parts of your home depreciate over time (hint: your roof).admin_recoop2020-12-19T14:57:51+00:00
Similar to how the value of a new car diminishes as soon as you drive off the lot, insurers now factor in depreciation for parts of your home that wear over time. Let’s say you have a 15-year-old roof with a 20-year lifespan. The actual cash value you receive from your insurance company will likely only be a fraction of the cost of replacement.
Gap #4: Typical home insurance may not cover common disasters.admin_recoop2021-01-07T20:37:03+00:00
Disasters like storm surge (caused by hurricanes) and earthquakes aren’t usually included in a standard homeowners or renters insurance policy. You’ll have to buy a costly single peril policy that will most likely have a ridiculously high deductible.
Gap #5: You get stuck waiting even when you’re covered.admin_recoop2021-01-22T18:53:50+00:00
Not all gaps are financial. With traditional homeowners or renters insurance, it could be 30 days before your claim is paid, and unfortunately, insurance companies may use delay tactics to get you to settle for less. After a disaster, you shouldn’t have to choose between getting paid quickly or getting what you are owed.