AAA Arizona - Highroads Magazine Online

Highroads Online > July/August 2006

Insurance News

Is Your Home Underinsured?

Arizona’s booming real estate has dramatically increased home values. In Maricopa County the average home is worth 52 percent more than last year while Pima County homeowners are seeing a 19 percent average increase. But how does this affect your homeowners insurance? It’s a common mistake to base your home’s replacement costs on your home’s value. The amount someone is willing to pay to buy your house has nothing to do with replacement costs. That doesn’t mean, however, that you should be complacent about your insurance coverage.

“Homeowners need to consider rising construction costs and renovations when insuring their home,” says John Lawson, Vice-President of Insurance Services, “A qualified agent will collect detailed information about your home to estimate the most accurate replacement costs.”

Most insurance policies include an inflation guard, which annually adjusts the coverage limit, but some construction costs have increased faster than the inflation adjustment. According to the Associated General Contractors of America, the price of concrete rose 10 to 15 percent last year and wiring costs are up 42 percent since 2004. In Arizona, replacement costs can vary from $100 to $400 per square foot with custom and older homes costing more. Location, material and size are just some of the factors involved in replacement costs.

In 2002, Americans spent about $200 billion on renovations, but according to the Insurance Agents and Brokers of America, only 25 to 40 percent of policies included those improvements. To ensure proper coverage, homeowners should always alert their agent to improvements.

AAA Insurance offers the following suggestions:

Visit an insurance agent to get an accurate assessment of your replacement costs.
Cover the cost of building-code compliance. Insurance for older homes needs to cover the cost of current regulations.
Protect your personal possessions from theft and loss. Ask for more coverage on one-of-a kind possessions like jewelry, artwork and coin collections.
Review your policy once a year

»Get an AAA Home Insurance quote
»Get an AAA Auto Insurance quote

HIGHROADS July-August Home

In This Issue

Features
» Are We There Yet?
» Family Reunions at Sea
» The Trails Less Traveled
» Divine Interlude

Travel
» Road Trip
» Weekender
» Auto Advice

AAA News
» Travel News
» Financial News
» Insurance News
» Savings News
» Online News

In Every Issue
» Presidents Message
» Members Forum
» Calender

HIGHROADS Home
HIGHROADS Archives

AAA Links

• Auto Insurance

Member Savings