When Should Homeowners Increase Coverage Limits?

Your homeowners insurance may have been adequate when you first bought it, but policies may fall short years later. Home values rise, renovation projects add square footage, and the cost to rebuild after a major loss climbs steadily as labor and materials increase. A policy that once matched your exposure may now leave a significant gap between what you might need and what your insurer would pay.

Signs Your Current Limits May Be Too Low

Life changes that seem unrelated to insurance often carry coverage implications. Consider revisiting and updating your limits after any of these situations:

• You completed a kitchen remodel, added a bathroom or finished a basement.
• You purchased high-value items such as jewelry, fine art or electronics.
• Construction costs in your area have increased since your last policy review.
• You built a detached garage, guesthouse or workshop.
• Your home has appreciated well beyond its value at the time you purchased your policy.

Rebuilding Costs vs. Market Value

The purchase price of a home and the cost to rebuild it are two different numbers, and your policy should reflect the latter. Materials, contractor availability and permitting timelines can all affect what a full rebuild costs.

How an Annual Review Helps

Reviewing your coverage at least once a year, as well as when making significant changes to your property, keeps your limits aligned with your exposure. Your agent can run a replacement cost estimate, flag gaps in your dwelling or personal property coverage, and suggest whether an inflation guard endorsement makes sense for your situation.

Speak to an Agent Near You

Contact Mcarrillo Insurance Agency today to schedule a policy review and make sure your coverage reflects your home’s current replacement cost. Serving Phoenix, AZ and nearby areas, our independent agents can compare options across multiple carriers to help you find a suitable policy.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.