As building, lumber, and construction costs rise -- which leads to rising replacement costs to your home -- it’s important to make sure your property is fully covered.

What would it take to rebuild your home if something happened? The average inflation rate in Wisconsin this past year was about 10% and material costs were up about 14% in 2021 from early 2020, and “that’s where the rebuild costs get out of whack really fast,” said Steve Aune, an agent with American Family Insurance in Madison.  

People typically review their policy and coverage every few years to make sure their income and assets are protected. This can prevent them from being underinsured. Aune said some reasons to revisit it include if you: 

• Make material changes to your home 

• Get a promotion or an increase in wages 

• Remodel your house 

• Have kids

• Get an inheritance

• Sell or buy a business

• Are empty nesters (when kids go off to college)

While some insurance agents and companies may reach out to you on a regular basis, it never hurts to be proactive and check in with them for a short consultation. Some companies even institute an annual cost of living percentage increase (in correlation to the Consumer Price Index) that automatically increases your dwelling coverage annually, as a way to offset rising construction and material costs. 

“Most companies have a built in-factor of 120% or even unlimited replacement costs coverage, but the problem is if the base policy isn’t insured to 100% of what they think it would cost to rebuild the home, that increase may not activate or be effective,” Aune said. “Isn’t it worth 30 minutes to address a major windfall?” 

It’s also important to ask your agent or insurance company what criteria for finishes they are using based on MLS photos to arrive at a rebuild value. “There’s a big difference between economy, standard, above average, and custom finishes, and the difference in coverage could be over $100,000,” he said.

Aune reminds people that insurance companies often add new discounts that could save them money, so it’s worth it to make a call or send an email to their agent.  

Contact Steve

Steven Aune, Agent Aune & Associates IncAmerican Family Insurance658 S Gammon Rd Ste 202, Madison, WI 53719-1374Office Phone: (608) 274-9702 Fax: (855) 312-2843

American Family Insurance is not affiliated with Mad City Dream Homes at RE/MAX Preferred.