SUNDAY, OCTOBER 1, 2023
When looking for a home insurance policy, you will likely see that your home’s value has a hefty influence on your home insurance rates. This is because the total replacement cost value of your home affects how much the insurer will pay after a claim.
This means that when the value of your home changes, so may your auto insurance policy. 
What is Total Replacement Cost Value?
The total replacement cost value of your home is not the same as its market value. Instead, it is how much it would cost to completely replace the home after a disaster including building and material costs. This is calculated based on the value of the home per square foot along with the value of fixed amenities and features.
It is generally recommended that you insure your home for 100% of its total replacement cost value. Covering for less then 80% can leave gaps in your coverage, which is why any upgrades to the home should be sent immediately to your insurer.
Upgrades to your home can change the total replacement cost value of your home. This can change how much insurance you need. For example, say you redo your downstairs bathroom. A month later a fire breaks out, destroying the bathroom and the bedroom beside it. If you didn’t notify your insurer that you made changes to the bathroom, any upgrades—such as countertops and faucets—may not be covered under your home insurance policy.
Can Home Upgrades Save You Money?
In other circumstances, certain home upgrades may actually save you money on home insurance. Home insurance premiums are partially calculated on how at risk you are of filing a claim. Lowering that risk can help you save money on home insurance by reducing your likelihood of filing a claim.
Installing updated fire alarms, anti-burglary systems or reinforcing areas of your home against storms can help you save money on home insurance.
Be sure to speak with your insurance agent about ways changes to your home can affect your home insurance coverage and rates. Also ask about ways you can save money on home insurance such as qualifying for discounts.
While your insurance agent doesn’t need to know about every little change made around your home, such as curtain changes, they do need to know about the drastic updates so that your policy can be adjusted.
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