The Basics of Home Insurance - Dwelling Value

When we discuss homeowners’ insurance with homes in North Central Washington, we always start with the same first step. People ask us about all sorts of things, but the independent insurance agents at Wenatchee Insurance start from the bottom, which is the dwelling coverage amount. Without that estimated amount required to rebuild your Wenatchee home in the event of a total loss, you really don't have a home insurance policy. Can you rebuild your home after a total loss?

The discussion around that number is always is it enough or is it too much. People love to haggle over this number. It’s a three bears situation, not too high, not too low, and just right. We want to hit that just right number. Let's see what goes into this number and if you have enough to rebuild! How Is the Estimate Determined?

The first step to determining the dwelling amount is to look at the square footage and year that your home was built. This establishes a size, or amount of construction needed while also shedding some light on the type of materials and construction that you might have. Homes built before 1950's typically have a different foundation and lumber than those built in the last ten years. That difference results in different materials and methods of construction. The next step is to look at the neighborhood and zip code that your home is in. It's easy to understand that many homes built in Fancher Heights have slightly different amenities and construction than those built in much of Methow Street. While these aren't perfect, they give us a great starting point.

To round out the process of determining that number, there becomes a series of questions to fill in. The estimator will want to know how many stories, bedrooms, and bathrooms you have. It will ask for ceiling height and flooring materials. Do you have built in cabinetry, granite countertop materials, or special chandeliers. The more details around things like imported Tuscan marble flooring, the more precise the estimated dwelling amount can be. One final note on the estimate. The insurance companies are also including costs for site prep work in a rebuild. To rebuild, the wreckage has to be hauled away and that is thousands of dollars. How do you calculate a dwelling coverage amount?

Now that there is a basis of how the number is derived, how can we know if it's enough? As a rule of thumb, rebuilding a one-off home these days is tough to do for less than $100 to $150 per square foot. The volume, tract home builders can build for less than that because of volume pricing. But not the one off which is what your rebuild will be as it's a claim on a preexisting home site. As we add things like solid surface counters, hand milled hardwoods, and jetted tubs the number can easily climb to $175 per square foot on a mid-level home and can push $250 per square foot as you migrate into 10 to 12 foot ceilings and that imported Tuscan marble we mentioned earlier. Our job is to make sure there is enough. I have enough to rebuild my home!

What else should I know?

The numbers ebb up and down over time. Wenatchee Insurance in recent years has seen a building boom go on. The basic law of supply and demand has moved construction costs up as demand has increased. This effects the value of the estimate. Special events can make this problem worse. The region has never fully recovered from the Carlton Complex Fire with 353 homes destroyed in 2014 and the wildfires that have followed. That moved prices up! We've seen those numbers increase with folks discovering that they could telecommute from our area which has inflated home values.

If the value hasn't changed on your insurance policy over the last 10 years then definitely shop your policy. We have have found a large amount of homes that were under valued because they didn't keep up with the rest of the inflation. And finally, different companies set different weights on the various components in the estimate. Over time, we've determined which companies have larger estimates than others. This knowledge allows us to pinpoint specific options that will appeal to various NCW homeowners as we go through the process of securing insurance for you. If you aren't sure what to do, or if any of this left you with a question, feel free to reach out to the agents at Wenatchee Insurance to find the right coverage for your home and family. We work for you and not a big insurance company!

Talk to Independent Agent today. 

Topics: home insurance, Washington property insurance, independent insurance broker, Wenatchee, Sunnyslope, Quincy, Lake Chelan, Wenatchee Insurance, Fire Insurance