Your home may be underinsured, leaving you stuck paying tens or hundreds of thousands of dollars in repair costs following loss or damage. Inflation, labor shortages, rising costs of building materials, and the supply chain breakdown may have contributed to large increases in the replacement cost of your home.
Recently, the Marshall Fire in Colorado destroyed 1,000 homes. It is estimated that two-thirds of these homeowners were underinsured. Unfortunately, wildfires like this are not uncommon in our State, even late in the year like we saw in Denton.
Your homeowner’s insurance policy should cover the replacement cost of the home ─ not the amount you paid for it or the remaining amount owed on your mortgage. Depending on your policy, if you are underinsured, your insurance company may pay less than the cost of repairs as a penalty for being underinsured. You would be left paying out-of-pocket for damages that fall below your policy maximum which may have otherwise been a covered loss.
Contact your insurance agent to ensure your coverage is adequate to replace your home. If you have questions, contact our team at 444-2040 or go to CSIMT.gov.