Is Your Home Underinsured? Why Rebuilding Costs May Surprise You

If a major storm or fire damaged your home tomorrow, would your insurance fully cover the cost to rebuild it? Many homeowners assume the answer is yes; until they learn that rising construction costs and inflation have changed what "enough coverage" really means.

Rebuilding Costs Are Rising Faster Than You Think

Over the past few years, the price of building materials and labor has climbed dramatically. Supply chain delays, increased demand, and regional labor shortages have driven up costs for everything from roofing shingles to drywall.

In Florida, these increases have been even more noticeable after severe storms. When multiple communities are rebuilding at once, contractors and materials become harder to find, and prices spike.

What does this mean for homeowners? The "replacement cost" listed in your policy hasn’t been updated in a few years, it may no longer reflect what it would actually take to rebuild your home today.

Why This Gap Matters

If your home is underinsured, your policy might not cover the full cost to repair or rebuild after a loss. That means you could be responsible for paying thousands of dollars out of pocket.

Even worse, being underinsured can sometimes trigger a co-insurance penalty-reducing your payout because your coverage amount is below a certain percentage of your home's true value.

What You Can Do

Here are three steps to make sure your home is properly protected:

Review your coverage limits annually.

Your policy's dwelling coverage should reflect what it would cost to rebuild your home, not what you paid for it or what it's worth on the market.

Ask about a replacement cost estimate.

Your insurance company can help update the estimate based on current construction trends and local costs.

Consider inflation protection.

Some policies include an inflation guard that automatically adjusts coverage each year. If yours doesn't, it may be worth adding.

Peace of Mind Starts with a Review

Insurance is designed to protect you from the unexpected, but only if your coverage keeps up with real-world costs. Taking a few minutes to review your policy today can prevent a financial shock down the road.

At Sterling Meadows Insurance Agency, we help homeowners throughout Florida make sure their coverage keeps pace with changing times. Contact us to schedule a coverage review and confirm that your home is properly insured for today's rebuilding costs.