It would be a rare person who hasn’t come across a news story during the past several months with headlines such as “Supply-Chain Problems” and “Rising Inflation.” And it would be an especially rare person who would dispute the truth in these headlines. After all, these two issues, often in combination, affect every aspect of our daily lives. We experience the effects when we go the grocery store, the hardware store, or the gas station and when we try to purchase the latest electronics or make vacation plans. Name it, and odds are good that supply-chain problems and rising inflation have complicated it.
Although it might not automatically occur to you, these two issues also impact your homeowners insurance, specifically in matters related to your coverage A dwelling limits. This coverage is not the same as market value, which is what you paid for your home or what it might be sold for. Instead, coverage A dwelling limits concerns the amount—in today’s dollars—to rebuild your home exactly as it was in the event of a total loss.
The true rebuilding costs include the actual labor and material costs for the site work and foundation, as well as for a structure that matches the home you had prior to the loss. Market research done here at The Barnstable indicates that builders are quoting a minimum of $300 per square feet of living space to build a basic home on Cape Cod and 50 percent higher for homes on Martha’s Vineyard and Nantucket.
Compliance with changes in building codes also affects the true cost of rebuilding your home as it was before the loss. Adjustments to the Massachusetts building codes from 2008 on require that homes in coastal areas like Cape Cod and the Islands be built to withstand hurricane-force winds.
For example, even if 2”x4” framing was allowed when a home was originally built, 2”x6” framing is now generally required, a modification that can significantly increase reconstruction costs. And enhanced framing requirements represent only one of many stipulated changes that today’s building codes in our area require to ensure the integrity of the structure’s exterior envelope. An available protection, called Ordinance or Law Coverage, can mean a worry-free reconstruction rather than thousands of dollars in out-of-pocket expenses.
Nobody knows the history, characteristics, and elements comprising your home better than you. Does your home feature custom woodwork, upscale appliances and finishes, exterior decking, and so on? The beauty and increased utility of these attributes add great value—and considerable cost, should they need to be replaced. Therefore, now might be a good time to have a discussion with your independent agent about the coverage A limits and Ordinance or Law coverage in your Barnstable homeowners policy to ensure that your home remains fully protected.