How Much Insurance Do You Need to Rebuild a Home?

There is not a standard amount of insurance coverage you need to ensure you’re able to rebuild your home. Each home is as unique as the individuals that dwell within it. The most important component to any homeowner’s policy is its replacement cost. The replacement cost coverage is the amount of money it would cost your insurance company to rebuild your home, from the ground up, in the event of a total loss. It’s important to note, replacement cost is not the same as market value and varies greatly from home to home. Depending on your geographic location, and the current market conditions, you may be shocked to find that the replacement cost of your home is either drastically less, or significantly more than the price you paid for it.

Replacement Cost Factors to Rebuild a Home

Replacement cost considers many, many factors: size, shape and age of the home are the most significant. Finishes and style of the home are also important: what types of flooring and countertops are used, is the foundation block or concrete, how many bedrooms, bathrooms, what is the size of each room, how many windows, doors, etc., are there any specialty features: mill-work, built-in units or custom work?  All these details are imperative to ensuring your home’s replacement cost is calculated accurately.

Your Home Replacement Cost and Your Insurance Policy

After all the details of your home are recorded, specialty replacement cost systems, such as the Douglas Residential Cost Guide, calculate the replacement cost based on the materials used, labour required and even geographic location. Labour/man hours to build a home in Toronto will be more costly than labour in a small rural Ontario community. Replacement cost tools also factor in market values and prices; as such, inflation is taken into consideration. Most insurance policies increase the home replacement cost on policies by a certain percentage every few years to account for inflation; that being said, it’s important to re-evaluate your home replacement cost every few years to ensure the value remains relevant.

It’s also important to speak with your insurance company when completing home renovations, improvements or upgrades. Anything that will add value to your home will need to be captured in your home’s replacement cost; thus, a recalculation will be required.

Ensuring You Have Adequate Coverage in The Event of a Total or Partial Loss

Now that we’ve outlined the specifics of replacement cost to rebuild your home, the question still remains: How much insurance do you need to rebuild a home?

By calculating your home’s replacement cost, either with your insurance company, or utilizing a third-party calculator, such as the Douglas Residential Cost Guide, you can breathe a little easier knowing there are professional tools designed to ensure your home is covered accurately; however, it can still be a little daunting to put your faith into one system. It’s advisable to utilize a third-party valuation tool, in addition to your insurance company’s replacement cost tool, to compare the values and give you a better understanding of your home’s replacement value.

If you’re still uneasy and want extra assurance that your home will be covered in the event of a loss you can speak with your agent or broker about guaranteed replacement cost coverage.  Most homeowner’s policies are replacement cost policies, meaning your insurance company agrees to rebuild your home, or repair any damage incurred, up to the amount of your policy’s listed replacement cost. However, replacement caps out once the stated replacement cost has been reached.

A Guaranteed Replacement Policy

A guaranteed replacement cost policy states that your insurance company will repair or replace your home to put you in the same position you were in prior to the loss, even if the cost is over and above your policy’s stated replacement cost. Of course, there are stipulations: you cannot simply use the opportunity to rebuild your home with upgraded features, or add additional square-footage, etc. and think there will be coverage in place for these improvements due to your guaranteed replacement policy.

A guaranteed replacement policy states that your insurance company will put you back in the same position you were in prior to the loss. This means, the same finishes and square footage, not improvements. Coverage will cap out if a homeowner decides to implement improvements during the rebuild process. It’s also worth noting that some companies limit their guaranteed replacement cost policies to 110% of the replacement cost value. In some cases, with some companies, homes built prior to a specific year may not be eligible for a guaranteed replacement cost policy. It’s important to discuss your home’s replacement cost and your policy options with your agent or broker to understand what coverage options are not only available for you but are best for your home and your family.

Armed with your home’s calculated replacement cost and the proper knowledge of the various coverage options, you can take comfort in knowing that your home and your family are properly protected. Consult the Douglas Residential Cost Guide to properly estimate the replacement cost of your home.

What Does Rebuild Cost Mean for Home Insurance?

When shopping for home insurance, or simply updating your existing policy, there are a lot of coverages and terms to navigate. Your home and its contents are your most valued assets. It’s imperative that your home is not only insured correctly, but that you fully understand your coverages, policy details, and terms.  Fear not, we’re here to help.

What Is Rebuild Cost for Home Insurance?

The term ‘rebuild cost’ when discussing home insurance refers to the price it would cost your insurance company to rebuild your home, from the ground up, in the event of a total loss.  Rebuild cost is more commonly referred to as replacement cost or replacement cost new.

Why is Replacement Cost So Important for an Insurance Policy?

The most important aspect of replacement cost for your insurance policy is that it dictates how much your insurance company will pay out to replace your home in the event of a total loss.  It’s imperative that all aspects and details of your home are captured correctly to ensure an accurate replacement cost value. You’ll want to ensure there is enough coverage in place to replace your home from the ground up if necessary.

What If You Choose Not to Rebuild Your Home?

People who do not wish to rebuild their home in the event of a loss may opt for an actual cash value policy and may fail to understand what the impact of replacement cost is on their policy. Why does replacement cost matter if you don’t have replacement intensions?

Most insurance policies use the replacement cost value of the home as a baseline for other coverages listed on the policy. Many coverages listed on your policy are calculated as a percentage of the replacement cost value. For example, the personal contents coverage amount is usually calculated as a percentage of the replacement cost of your home. If the replacement cost of your home is calculated incorrectly, it can trickle down into every coverage of your policy, resulting in lack of coverage when you truly need it.

Ensuring You Have Adequate Coverage

Of course, the next logical question would be ‘how do I calculate my home’s replacement cost?’ and ‘how do I know if it’s enough?’ Luckily, insurance companies have their own replacement cost calculators they use to determine replacement cost. When insuring your home, they’ll ask a number of questions about the size, shape, and finishes of your home to help them calculate the replacement cost effectively.  Of course, this is a system that is not tangible to homeowners.

Get Comprehensive Insight Using the Douglas Residential Cost Guide

The thought of leaving such an important calculation up to one system that you have no experience with can be a little anxiety-inducing. This is where the Douglas Residential Cost Guide is here to help.  Douglas Cost Guide has developed a residential cost guide utilizing Canadian data and market trends to help Canadian homeowners calculate their home’s replacement cost with ease. Available online, the Douglas Residential Cost Guide is continuously updated to reflect most recent data and was designed with homeowners in mind. With over 30-years of costing and valuation experience, Douglas Cost Guide Inc. can help you calculate your home’s replacement cost with ease. Visit Douglas Cost Guide today to learn more.

Dealing with Insurance Adjusters After Water Damage & Flood

Experiencing a flood of any magnitude in your home can be devastating to homeowners; however, taking the right steps after experiencing a flood loss can help alleviate the stresses and expedite the clean-up and claims process.

What should homeowners do after a flood loss when it comes to insurance?

The first step to take after a flood loss is to safely assess the damage. The term flood can be alarming; however, depending on the extent of the damage and the amount of water present, a claim may not be warranted. If you experience a few inches of water in your basement due to a sump pump malfunction, depending on your policy deductible and your previous claims history, you may not want to proceed with a claim.

Determining the cause of loss

Assessing what happened and where the water came from is a good place to start. Water in your home can be a result of many different factors. Assessing where the water came from will help determine if your policy has the proper coverages in place to cover a loss if a claim is necessary. Speaking with your agent or broker about the different types of water damage coverage and what is best for your home is a must.

Take photos and document damage

After assessing what happened, taking photos of the water and any damages is advisable. Emergency work to remove water and try to dry the area will need to be completed as soon as possible to avoid mould and any further loss; however, you’ll need to document the water and any damages as extensively as possible to provide to the adjuster/agent or broker in the event of a claim.

Determine if a disaster restoration company should be consulted

After everything has been carefully photographed and documented you’ll need to determine if a disaster restoration company will need to be called to complete the emergency clean-up work, or if it’s something that can be completed on your own. If there are a few inches of water in your basement and the water levels have not impacted the electrical sockets or drywall or compromised the flooring or any personal belongings, cleaning up the water on your own may save you the trouble of putting through a claim only to realize the work completed is under your deductible amount.

Completing Emergency Clean-Up

If clean-up is an easy process and you choose to complete water removal on your own, tracking the hours spent on clean-up is advised. Some companies will apply the hours spent on clean-up toward the deductible, or take the hours spent into consideration when paying out the claim.

If a disaster restoration company is required to complete the emergency work, you’ll need to arrange for one to come out to your house as soon as possible. If you’re not sure who to call to complete the emergency work, your insurance company will have a list of companies that they can suggest for you. It is worth noting that the companies your insurance company works with are preferred vendors and work extensively with insurance companies and therefore understand the claims process, documentation and what’s required; however, you do not have to select a disaster restoration company that your insurance provider suggests. It is your right to select whichever company you are most confident and comfortable with.

Once a disaster restoration company is selected, they will complete the clean-up and provide a quote to repair or replace any damage. The quote will help determine if you want to proceed with a claim. Calling your insurance company to report the loss, provide documentation and let them know if a disaster restoration company has been out, or if you’ll be in need of one is the next step.

Dealing with Insurance Adjusters

Working with a disaster restoration company helps alleviate some of the stresses when it comes to dealing with the insurance adjuster. Disaster restoration companies will take their own photos, complete their own documentation and work closely with the adjuster to ensure they have everything they need.

Dealing with an adjuster in the event of a flood loss is a more simplified process than dealing with an adjuster for a fire. The key to success is documenting the loss and completing the emergency work to avoid further loss or development of mould. The adjuster will need to know the cause of the loss, the extent of the damage to the home and any damage to contents. It is the adjuster’s job to assess the damage and determine if repair or replacement of damaged items and components will be more cost-effective. It could be determined that drying and sealing the drywall may be more cost-effective than replacing the drywall. Speak to your adjuster about concerns you may have and ask questions about any decisions they may make that you’re uncomfortable with.

Making a list of questions and concerns you have and reviewing them with your adjuster is advised. If you’re uncomfortable with the adjuster’s decisions, voicing them to your agent or broker is the next step. Hiring a third-party adjuster to assess the loss is also an option; keep in mind, the cost of hiring the third-party adjuster will be at your own expense. Flood losses, although devastating to homeowner’s are more common than other catastrophic losses; as such, the claims process is fairly streamlined and dealing with adjusters can be a smooth process if you take steps to document the loss and aren’t afraid to voice your questions or concerns.

When it comes to a loss related to a flood or water damage, ensure you’re armed with accurate and essential information. Consult the Douglas Residential Cost Guide to calculate your home replacement cost.

Tips for Insurance Brokers on Insuring High-Value Homes

What constitutes a high-value home and how do you insure it effectively? These two questions can plague insurance agents and brokers when faced with the task of insuring high-value homes. Each insurance company defines high-value homes a little differently; some begin to consider homes high-value if its estimated Replacement Cost New is above $750,000 while others classify homes with an Estimated Replacement Cost of $1 million and above as high-value. It’s best to speak with your underwriter to determine what your company’s rules are before you begin the process of insuring a potential high-value home.

What Makes a High-value Home?

There are many factors to consider when determining if a home is a high-value home or if it should be rated on a standard policy. Below are some of the key elements to consider:

  • Was the home architecturally designed
  • Were rare or imported materials used in the construction of the home
  • Is there specialty or custom construction
  • Is there luxury products/finishes
  • Are there any ‘green’ or ‘high-tech’ features

The presence of specialty feature rooms such as spas, meditation space, theatres, bowling alleys or indoor swimming pools are also key factors in determining if a home should be classified as high-value. When in doubt, completing a walk-through of the home, if possible, is always advised. Completing a walk-through can shed light on the home, and the type of policy required to insure it effectively.

Items to Consider When Insuring High-Value Residences

Of course, the struggle with all insurance agents and brokers will be to insure a home for the best possible premium with the best possible coverage. Unfortunately, high-value home policies come at a higher premium. It can be tempting to insure a high-value home on a standard home policy, given that the reconstruction cost of the home could be very similar. However, this would be a disservice to the client, as a standard policy would not include coverages specific to high-value homes.

The policy limitations and endorsement options available for a standard homeowner’s policy would provide insufficient coverage for a high-value home in the event of a loss. Policy limitations on jewelry, collections, additional living expenses etc. all need to be increased for high-value homes.

Rating a home as high-value opens up a host of different coverage options that a standard policy simply does not provide. In and out servant’s coverage, in-home business coverage, landscaping coverage and significantly increased limits for jewelry, collections, furs and artwork are all available for high-value homes.

Consider Claims Service

As an agent or broker, you’ll also need to consider what type of claims service would be required in the event of a loss as well. High-value homes require specialty care in claims service. In the event of a loss, there is no standard way of replacing a one-of-a-kind light fixture or importing a new slab of Italian marble if needed. Claims service for high-value homes is customized to meet the needs of the client and the home.

Some high-value home policies can even offer full cash payouts without depreciation; clearly, this is not an offering available on standard home policies and may be an option your client would like to explore.

Consult the Douglas Residential Cost Guide to Simplify the Process of Determining the Replacement Cost for High-Value Homes

When in doubt, Douglas Residential Cost Guide can help determine replacement cost for high-value homes. Visit Douglas Residential Cost Guide today to help you protect your clients and their high-value homes.


What to Expect from Insurance Adjusters?

When you experience a fire claim, an insurance adjuster will usually be sent to your home to assess the damage and create an estimate for the repair/replacement of your home and personal belongings. It is the insurance adjuster’s job to complete a walk-through of the home, inspect any and all damage and come to a reasonable estimate that honours the insurance companies’ duties outlined in your policy, while making fiscally responsible decisions.

What do Insurance Adjusters Look for After a Fire?

When an insurance adjuster arrives at your home, they will need to conduct a complete walk-through of the house, paying attention to all areas that experienced damage. They will assess everything from damage to floors, ceilings and walls, mouldings, outlets, light fixtures, windows, and everything in between for the actual structure of your home. Depending on your coverages, it is first and foremost the insurance company’s responsibility to repair or rebuild your home to put you in the same position you were in prior to the loss.

Secondly, the adjuster will assess the damage to personal contents. For damage to personal contents, the onus is really on the homeowner to provide as much detail as possible for items lost. The adjuster will assess the extent of the damage to personal property/contents, but to truly capture costs correctly takes a little footwork on your part.

How Can a Homeowner Prepare for an Insurance Adjuster’s Walk-Through?

Preparing yourself before your insurance adjuster arrives onsite can help to streamline the process and ensure things do not get missed.  Here are a couple of things that homeowners can do to prepare for an insurance adjusters walk-through.

Complete Your Own Walk-Through

It is advised that prior to the adjuster walk-through, you complete your own walk-through.

  • Take photos of the damage
  • Write down all damaged/lost items
  • Include a description of the item, the cost, and any other relevant information: brand name, date of purchase
  • Locating any possible receipts or photos of lost/damaged items for proof of purchase

Part of the claims process will be completing a proof of loss document that requires all this information; anything you can complete ahead of time can expedite the process.

Reviewing Your Policy

Reviewing your policy to understand your coverages, endorsements and limitations before the adjuster arrives is a must. If you have actual cash value coverage rather than replacement cost coverage for your policy, the adjuster’s process will be different. Actual cash value will provide you with a figure for any damage incurred, less depreciation; replacement cost coverage will provide an estimate for how much it will cost to repair or replace the damage.  Understanding what the process will look like and adjusting your expectations accordingly will avoid any misunderstandings in the future.

Adjusters Will Examine Damage to Determine Best Plan of Action

Making fiscally responsible decisions when examining damage is part of an insurance adjuster’s job / duties. They will examine damage to your home and contents and determine if it would be more financially responsible to repair or replace the item.

As a Homeowner, Be Involved in the Damage Assessment

Asking your adjuster what the plan is for specific things and voicing concerns is encouraged.  If you’re worried that the smell of smoke has seeped into the drywall and will always be present, ask if they plan to try and seal the drywall, or if it will be replaced.

  • It’s important to ask questions and voice concerns during the process to ensure you’ll be satisfied with the process and the outcome.
  • Document all conversations with your adjuster and your insurance company, keeping records and making copies of all documentation sent to your insurance provider as part of the claim is a must.

How Long Will an Insurance Adjusters Visit Take?

Depending on the extent of the damage, an adjuster walk-through could take an hour, or most of the day. If the damage is central to one room and the rest of the home is unscathed, the actual walk-through will be a fairly quick process; if the entire home experienced damage, the inspection will be a lot more extensive and thus require a lot more time. If you’re concerned about how long the actual walk-through will take, ask the adjuster when they call to make the appointment if they have an estimated time frame for the process. Examining the agent/broker notes, they should be able to provide an educated guess as to how long they’ll need.

If you conduct a little research and legwork prior to the adjuster walk-through, it can save a lot of time and effort and expedite the claims process, getting you back on your feet and resting comfortably in your home once again.

Be prepared in the event of a partial or total loss if your home. Determine your home’s replacement cost and ensure you’re armed with an accurately estimated cost figure. Visit the Douglas Residential Cost Guide to learn more.

Dealing With Insurance Adjusters After a House Fire

Experiencing a house fire of any magnitude is a devastating ordeal. In the aftermath of a disaster, it can be difficult to wrap your mind around what to do next. After the flames are extinguished and your family is safe, the next step is to call your insurance provider to report the claim. Your insurance agent or broker will document the details of the incident: date, time, extent and location of damage. An insurance adjuster is typically assigned to your claim, at the discretion and direction of the insurance company.

Dealing with insurance adjusters after experiencing a home fire can be overwhelming, but armed with the right knowledge, questions and documentation can help alleviate some of the stress.

What to Do Before the Insurance Adjuster Arrives After a House Fire

If it’s safe to do so, before the insurance adjuster arrives, complete a walk-through of your home. Take photos of any damage, make a list of damaged items, the price paid for the items and if possible, find any relevant receipts.

Part of the claim process is to complete proof of loss documentation that details what was lost; creating the list and including relevant details prior to the adjuster’s arrival can help alleviate stressors later on.

Details to Provide Your Insurance Adjuster with After a House Fire

If possible, the following details can aid in the quick replacement of items:

  • Receipt of purchase
  • Photos of items
  • Date of purchase
  • Brand name
  • Serial numbers
  • Description

Read Through Your Insurance Policy and Ask Questions

Understanding your policy coverages, endorsements and limitations is important. Read through your policy or discuss your coverages with your agent or broker prior to the adjuster arriving. It’s important that you understand any limitations your policy may have or be prepared to provide additional details for specialty items or collections if necessary.

The estimate your adjuster provides will also be subject to the types of coverage you have. If you have an actual cash value policy, replacement of items will not be covered; it is important that you understand the coverage details of your policy prior to the adjuster’s arrival.

Verify Insurance Adjuster’s Identity

When your insurance adjuster calls to set-up an inspection date and time, take down their name and verify their identity upon arrival. Scams and fraud in the wake of a disaster can happen. Confirming the identity of your adjuster as a safety precaution is advised.

Complete the Walk-Through with the Insurance Adjuster

Being present for the appointment and completing the walk-through with your insurance adjuster after your house fire is imperative. Complete the entire walk-through with the adjuster, be sure to point out any issues or concerns you may have and ask questions.

It is important to discuss any items of significance or sentimentality with your adjuster. It’s their job to determine which items can be repaired and which require replacement; they generally err on the side of the most cost-effective measure. It may be more fiscally responsible to replace an area rug rather than pay for the expense of cleaning; however, if the area rug in question is a family heirloom it would be prudent to discuss this with your adjuster. Keep in mind that walking through your home after a fire can be an emotional experience. A lot of items may hold emotional significance for you but can be replaced.

Get a Second Opinion

Replacing lost items or rebuilding your home after a disaster is an emotional and trying experience. If you aren’t satisfied with the estimate the adjuster provides, it is best to ask questions and understand how the estimate was determined. If you still aren’t comfortable with the estimate, hiring a public adjuster from a third-party is an option to explore. Keep in mind the cost of hiring a third-party adjuster would be out of your own pocket and not covered by your insurance policy.

Visit the Douglas Residential Cost Guide to calculate your replacement cost and ensure you’re armed with an accurately estimated cost figure in the event of a total or partial loss.

Homeowners Insurance After Fire Loss

After experiencing a fire loss, one of the biggest questions on homeowner’s minds is ‘what does insurance cover after a fire?’ To answer this question fully, you’ll have to understand which type of coverage you have. If you have replacement cost coverage, your policy will cover the cost to repair or replace any damage to put you in the same position you were in before the loss. If you have actual cash value coverage, your policy will pay for the cash value of any repair or replacement required, less depreciation.

What Does Insurance Cover After a Fire?

Below, we take a look at commonly covered items and costs when homeowners encounter a home fire resulting in a total or partial loss.

Debris and Removal

If you experience a total loss in the event of a fire, there will be substantial debris that will require removal. The cost of debris removal is covered under your policy. If you experience a partial loss and emergency work is required to avoid further loss or damage to the home, your insurance will cover the cost of the emergency work, such as tarping off the roof, or boarding up windows, etc.

 Additional Living Expenses

Many worry about additional living expenses incurred after a fire. If you can’t live in your home while it’s being repaired or rebuilt, where do you go and at who’s expense? Your policy has a section called ‘loss of use’ that covers additional living expenses incurred as a result of the loss. This section will cover expenses such as living accommodations: hotel, motel, apartment rental, etc. If you’re forced to live in a hotel in the interim, your policy will cover meal expenses as well. Replacement of items needed such as toothbrushes, clothing, etc. are also covered under this section. Anything you need to purchase as a direct result of the loss will be covered under this section. Of course, all receipts will need to be kept, and common sense will need to be used. If you purchase a designer suite to replace your blazer and slacks worn to work, you’ll have to pay the difference in price.

Replacement of Personal Belongings

With the replacement of your actual home comes the repair or replacement of your personal belongings. Anything that was damaged or destroyed due to the fire will be repaired or replaced under the personal property section of your policy. Receipts will need to be kept and submitted as part of the claim. Cleaning or repairing items that incurred smoke damage but can be restored to its former state will also be covered under the policy.

In short, any cost you must incur as a result of the loss should be covered under your policy.  It’s always best to speak with your agent or broker directly to fully understand your policy and its coverages before a loss is incurred.  It is also important to choose coverage options wisely; replacement cost coverage or actual cash value coverage are very different and can result in two very different experiences in the event of a claim. To ensure your home is protected correctly, check out the Douglas Residential Cost Guide today to calculate your home’s replacement cost.


How to Deal with Insurance Adjusters

What Is the Insurance Adjusters Role?

After a fire loss, your insurance company will send out an insurance adjuster. The adjuster’s job is to assess the damage the loss has caused, determine if the loss is a partial or total loss, if there are aspects that could be repaired, and if repair or replacement would be more cost-effective, while still maintaining the integrity of the item/structure. In short, it is the adjuster’s job to assess the scope of work for the claim.

How Do You Deal with Insurance Adjusters?

Ensuring you are present for your adjuster’s walk-through of the home to assess the loss is imperative. This is a personal experience for you, ensuring your adjuster assess all the details is important. Of course, this is their job, but there may be questions, concerns, or decisions they make that you’ll want to discuss, verify, or provide additional detail on. For example, if a quilt was damaged by smoke, the adjuster may determine it will be more cost-effective to replace the quilt rather than incur the expense of trying to clean/repair it. However, the quilt in question may be a family heirloom that’s been passed down for generations and is irreplaceable. In this circumstance, it’s important that you’re present when the adjuster walks through so you can voice your concerns regarding the quilt and explain its significance.

Can You Negotiate with Adjusters?

Of course, when it comes to determining the scope of a claim, an adjuster’s opinion may differ greatly from that of the homeowner. Can you negotiate with your adjuster? Yes, you can; as outlined in the quilt example, stating your case, outlining why you feel differently and discussing details with your adjuster is all part of the process.

What Do Insurance Adjusters Look For?

When assessing the scope of a claim, it is the adjuster’s responsibility to assess what damages were incurred, and what is the most effective way to correct the damage. Taking structural integrity and safety into consideration, the adjuster will determine if the loss is a partial or total loss, if there are elements that can be repaired rather than replaced, and what the most safe and cost-effective course of action will be.

Issues in Dealing with Your Adjuster?

If you have any issues dealing with your adjuster, generally your agent or broker can act as a buffer. If you still feel like your needs are not being addressed by the adjuster provided, there is an option to seek legal counsel, or to hire a public adjuster for a second opinion; keep in mind, these options are costly and will be at the homeowner’s own expense.

It is true that adjusters work for the insurance company and it is their job to keep costs as low as possible; however, it is also their job to ensure the insurance company’s end of the homeowner’s policy contract is upheld in good faith.  Adjusters are required to uphold legal and ethical standards and complete their job as efficiently as possible with all parties’ best interest in mind. Be patient and fair with your adjuster and you should receive the same treatment in kind.

Visit the Douglas Residential Cost Guide to calculate your replacement cost and ensure you’re armed with an accurately estimated cost figure in the event of a total or partial loss.

Can I Insure My Home for Value without Obligation to Rebuild?

When it comes to home insurance, homeowners often wonder if they are required to rebuild their home in the event of a total or partial loss. This all depends on the type of coverage you have and the stipulations your insurance company may have in place. Some insurance companies offer replacement cost with no obligation to rebuild; others may offer an endorsement you can purchase to exempt you from having to rebuild, while others require rebuilding for a replacement cost policy.  Always ask your agent or broker which coverage options are available.

When shopping for homeowner’s insurance, determining if you’ll need to rebuild your home in the event of a total loss is imperative. If the answer is no, replacement cost coverage may not be the best choice for your needs. Exploring actual cash value coverage is an option if rebuilding is not a priority. Be sure to ask the right questions when shopping for your home insurance to ensure you have the right coverage for you.

Actual Cash Value

Actual cash value is a great way to ‘take the money and run’ as it were.  There is no obligation to rebuild, and you can spend the money received as you see fit; however, actual cash value does factor in depreciation. All items lost will be depreciated before a payout is made.

Replacement Value

In some cases, homeowners may want to explore the option of insuring their home for full replacement value, but feel that rebuilding would not be in their best interest. Some insurance companies do offer policies in which you can insure your home for its full replacement value without the obligation to rebuild. With policies such as this, a payout for the full replacement value of your home would be made in the event of a total loss. The only obligation to the homeowner is then to clean up the site of debris.

Check In With Your Insurance Policy

Some insurance companies may include no obligation to rebuild directly in their replacement cost polices; other companies may have an obligation to rebuild if replacement cost is purchased. However, if you enquire about your obligations and are not interested in rebuilding in the event of a total loss, they may offer an endorsement you can add to your policy that would exempt you from said obligation.

Much like each home and the needs of each homeowner, each insurance company is unique in its offerings and coverage choices.  Its best to be armed with a list of questions and concerns you may have before visiting your agent or broker to ensure you address all your needs and purchase the coverage options that are best for your home and your family.

How to Choose a Replacement Cost Valuator Tool

Before exploring how to choose a replacement cost valuator tool, one must understand exactly what a replacement cost valuator tool is.

What Is a Cost Valuator Tool?

A replacement cost valuator tool is a book, program, or guide designed to help homeowners estimate the replacement cost value of their home. Homeowners may need to determine their replacement cost for several different reasons. Putting a dollar figure on how much it would cost to rebuild your home in the event of a total loss is nearly an impossible task to undertake on your own. Thankfully, homeowner’s have a number of different valuation tool options they can explore.

Do Your Research

Before selecting a replacement cost valuation tool, it’s important to research a few imperative aspects. The most important characteristic to consider is who developed the valuation tool.  What are the credentials of the parties involved in the design and build of the valuation tool?  You’ll want to ensure the tool you select was designed by a company or individuals with knowledge and experience in home valuation and market research.

How Frequently Is the Tool Updated?

Once you’ve found a tool that was designed by a reputable company, you’ll need to research how often the tool is updated. Markets, trends, costs, and inflation all fluctuate and can significantly impact replacement cost valuation if not captured correctly or updated regularly. You’ll want to ensure the valuation tool used is updated on a minimum of an annual basis to ensure the most accurate costing is captured. Some tools available may be developed by reputable companies with accurate, extensive research and data captured, but are updated every five years. Markets and trends can change drastically over the course of a five-year time period. It’s important to ensure your valuation calculator is as current as possible to ensure accuracy in your replacement cost value.

What Market Does the Cost Valuation Tool Represent?

Additionally, you’ll want to consider where the tool was developed, and for what market. Utilizing a valuation tool that was developed in the US to capture the replacement cost of your home in Canada will not generate accurate results. The tool you select should take geographic location into consideration. American costs, markets, and trends are vastly different from those in Canada. Selecting a tool that captures data relevant to your market and location is important.

The Douglas Residential Cost Guide Was Developed for Canadian Homeowners

The Douglas Residential Cost Guide was developed by industry experts with over 30-years of valuation experience; it was developed by Canadians, for Canadians, examining Canadian markets and trends, utilizing Canadian data. Douglas Residential Cost Guide was developed with users in mind to ensure not only ease of use, but accurate results. Try the Douglas Residential Cost Guide today to ensure your home’s value is fully captured.