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Rising Inflation Could Mean Your Home is Under-insured.

posted by TrueNorth Risk Management on Tuesday, April 5, 2022

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Given the Inflation challenges we are facing, and following natural disasters, the cost to repair or replace a home continues to go up.

The cost of construction is drastically increasing due to inflation. What does that mean to you as a homeowner? 

Homeowner policies offer financial protection in the event of an unexpected disaster involving your home. But how you are reimbursed following a claim depends on the type of coverage you have.

Purchase Adequate Coverage

Ensure that your homeowner's policy limits correspond to the cost to rebuild. Unlike a home’s resale value (which includes the cost of the land), the cost to rebuild is based on the amount needed to hire a contractor plus building materials and other additional costs. You decide how much coverage to buy for your home, but TrueNorth recommends purchasing coverage at least equal to the estimated cost of rebuilding your home. 

How Does this Differ from Market Value?

The market value of your home is the amount a buyer would pay for your home, including the land, no matter how much rebuilding would cost.
What is Replacement Cost?
Replacement cost is the rebuilding cost necessary to repair or replace the entire home, including construction costs. This cost is different than the following:
  • The market value
  • The purchase price or the cost of the land
  • The amount owed on a mortgage
How do I Know Replacement Cost?
Get an estimate of the replacement cost of your home from a reputable builder. TrueNorth can help.

Home Improvements

When making a major change, let us know specifics. For example, if you’re replacing a standard bathtub with a whirlpool tub, or if your new countertops are made of marble, your home improvements could add enough value to your home to justify reexamining your coverage limits. 
We’re Here to Help 
Have other questions or doubts? TrueNorth  is ready to assist you in the process of determining the value of your home and purchasing the right coverage to protect your investment.


If you'd like help understanding what coverage is right for you - reach out to us today. 


This publication has been prepared by TrueNorth Companies, L.C. and is intended for informational purposes only. Transmission of this publication is not intended to create, and receipt does not constitute, a client relationship with TrueNorth Companies, L.C. This publication does not constitute any type of representation or warranty, and does not constitute, and should not be relied upon as, legal advice. This publication is not a contract and does not amend, modify or change any insurance policy you may have with an insurance carrier. © 2022 TrueNorth Companies, L.C. All rights reserved.

About Author

In addition to helpful weekly guidance on home and auto, TrueNorth provides a number of insurance options to protect your family from risk. For information on a home or auto quote, visit or call us at (319) 739-1277. We'd like nothing more than to help safeguard the things that matter most to you. 

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