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Insurance coverage limits – Is your insurance enough? What to know and what to ask

APRIL 28, 2022

If you have read or watched the news lately, one topic has been mentioned frequently – Inflation. Inflation is a very broad term, and often not easily defined.  Most think of inflation increasing the cost of food, gas or other goods you purchase. But what about the property you own? 

Many policies – like homeowners insurance – come with a coverage limit. A coverage limit is defined as the maximum amount an insurance company will pay in the event of a loss.  However, other policies also may contain coverage limits, such as those for commercial auto, farm auto, recreational vehicles, watercraft, or farm & ranch property. Nodak Insurance Company wants to make sure our clients are protected to the level that is adequate, if a loss may occur. 

Let’s discuss some different policies and situations where coverage limits should be discussed with your Nodak Insurance agent:

Homeowners – The cost of building materials such as roofing, siding, and lumber have increased over the last few years. That means that if a loss occurs, it will likely cost much more to repair your home. It also could mean that in a catastrophic loss, the amount needed to replace your home could be much greater than the existing limit of coverage. 

Farm & Ranch – Many farm and ranch policies have sub-limits on coverage for things like buildings, bins, and farm machinery. Not only has inflation increased the cost of repairs to those items, many items such as farm machinery have increased in value as well. 

Does your farm policy have stated limits of coverage on any items? If so, it may be a good idea to discuss those limits with your Nodak Insurance agent. 

Commercial Auto, Farm Auto, Recreational vehicles or watercraft – On these types of policies, insurance companies may require a stated limit of coverage. This means that a total loss will be paid at the lesser of 1) the actual cash value of the unit, or 2) the stated limit of coverage. 

For example, if you have had a boat insured for the last 5 years, you may have stated the value to be $10,000 for your insurance policy when it was initially insured. Inflation and market demand have caused increases in values recently in the used watercraft market, and may have increased the boat’s value to $12,000 currently. If a total loss occurs, the most your insurance will pay is the $10,000 stated limit of coverage.  This would result in the client having to pay out of their own pocket, to make up the difference, when replacing the damaged watercraft

Nodak Insurance Company agents are happy to discuss your current situation with you to determine if your coverages are appropriate to protect your assets. 

If you have insurance with another company, you can contact a Nodak agent for a free review of your existing coverage, and find ways that Nodak Insurance can adequately protect your property. 



Nodak Insurance Company

1101 1st Ave N
Fargo, ND 58102