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Is your home insured to the appropriate value?

MAY 18, 2021

Going into 2021, you may have seen news articles about the dramatic increase in items like lumber, roofing material, or appliances. Or maybe you have suffered the “sticker shock” when you have went to make a purchase!

But what does this have to do with my homeowner’s insurance policy? Well, with rising costs it could create a situation where your home is underinsured. That means that the amount to cover the replacement cost to rebuild or repair your home is not adequate.


Most homeowners just simply believe it is unlikely that their home will ever suffer a total loss. But losses do happen. Each minute, 67 home fires ignite across the United States, according to a 2019 report by the National Fire Protection Association. Owners of homes that are not properly insured are often faced with huge out-of-pocket expenses to reconstruct their residence.


Many homeowners look at the amount of insurance to cover their mortgage amount or use a scope of average home values in their area to determine the amount of coverage needed for their home. But if you haven’t reviewed your policy amounts recently, you don’t want to find out after a catastrophic event that the cost to repair or rebuild is greater than your policy limit. Often, replacement cost (the amount needed to rebuild your home) is much greater.


The value that is determined from a real estate appraisal refers to the market value, or the selling price of your home. This includes several variables including, the overall economy, property values in a particular location, the age and condition of the home, and the type of material inside the home (marble floors vs laminate).

The replacement cost however, is based on the total cost of labor, activities, and materials to put the structure back to the way it was before the damage. This would include costs related to clearing and cleaning up the damage debris -activities that precede the actual build out of the home.

The important thing to know is that you are insuring your home based on the cost it would rebuild the structure of your house, independent of the market price, your mortgage, or property values.

Some homeowners believe that adding additional coverage is expensive. However, the cost is usually a nominal monthly fee—about what it costs to buy lunch—but is worth thousands of dollars of additional coverage. In the end, insuring your home to its proper value provides priceless peace of mind for you and your family.

Your Nodak Insurance agent is always prepared to sit down with you and review your homeowners’ policy, whether you are currently our customer or would like us to review your policy with your current company. A few minutes of review and preparation now could save you years of frustration and headaches if a terrible, catastrophic event occurs.



Nodak Insurance Company

1101 1st Ave N
Fargo, ND 58102