In last week’s blog, we dealt with the topic of a person buying a home for a certain price and the insurance quote coming in at an amount that was different than the purchase price. Let’s change the scenario slightly to something I also deal with on a regular basis.
- I’m talking with a homeowner that’s been in their home from a couple of years to a couple of decades.
- They want to review their home insurance to determine whether they are paying more than they should and evaluate if they are properly insured.
One of the things I look at is their dwelling amount compared to their square footage.
- Divide the home’s insured value or dwelling amount by the home’s square footage.
- This provides an insurance coverage amount per square foot.
- For example, a home is insured for $200,000 and has 2,500 square feet is currently insured for $80.00 per square foot.
- In most cases this home is underinsured.
Here are some guidelines you can use now to help determine if you’re adequately insured;
- Starter homes typically run $90 to $105 a square foot
- Nicer to semi-custom homes $105 to $125 a square foot
- Semi-custom to custom homes $125 to $150 a square foot
- Custom to luxury homes $150 on up
These guidelines can vary depending on:
- The home has more than 1 story.
- Where the home is located.
- Improvements made to the home since it was built.
- The level of finish out.
If you want to be sure, let us review your current insurance. We will do so without trying to sell you anything (I don’t like being sold either!) and can provide you with a complimentary assessment. Let us know what you think and share a comment with us!
