MONEY MATTERS

money matters BY CAROL LEONETTI DANNHAUSER

LOOK UP PROTECTING YOUR BIGGEST ASSET WITH INSURANCE

Lindsay Rand McGuckin

Home prices have soared in Fairfield County since the pandemic, leaping 53.2 percent from March 2020 to March 2022, according to the William Pitt/Sotheby’s Market Tracker. New construction is surging. Renovations have reached record numbers.

Has your home insurance coverage kept up? Hint: The answer has less to do with your home’s sticker price, than, say, the cost of those new countertops. out while you are out of town, destroying your home and its contents. That kind of catastrophe “can leave you really open to some heartache,” McGuckin says.

She recommends a “guaranteed replacement value” policy, which means that your home and your stuff will be replaced in the event of a disaster, even if the cost to replace them exceeds your policy limit. That coverage isn’t cheap, but it can mean many thousands of dollars heading your way when you need it most.

Replacement-cost protection is all the more important if you’ve done a recent renovation, as many homeowners in lower Fairfield County have since Covid.

“Oh my gosh, we’ve had people tear their homes down and rebuild and we’ve had to tell them, ‘Oh, by the way, your coverage could be in jeopardy,” McGuckin warns, adding that a clause in all policies cautions against doing work without informing your insurance company, as this can void the policy. “We definitely prefer that you tell us ahead of time.”

“You have to remember that market value is very different from replacement value,” says Lindsay Rand McGuckin, vicepresident of Rand Insurance in Greenwich. “We want to make sure that if your house burns to the ground, you have enough to replace it.”

A number of variables factor into how much your premium costs, from your home’s location to its age, size, type of house, surrounding property values, your claims history and more.

Inflation is also a consideration. Many policies automatically hike a premium by a few percentage points each year to guard against inflation, McGuckin says.

But the cost of materials for home construction—for plastics, steel, fuel, paint and the like— leapfrogged even higher than inflation last year, increasing more than 20 percent, according to the Associated General Contractors of America. So that built-in inflation protection might not cover the cost of rebuilding and furnishing your home if, say, a water pipe bursts or a fire breaks

If your agent isn’t asking you each year for an update on your home and its contents, you should do a review yourself. Examine your coverage and premiums— particularly the values listed on your policy. Did you remodel the basement or garage recently, or make upgrades in technology and equipment to work remotely? Did you install an outdoor kitchen or a pool, or add other distinctive features?

Before you connect with your agent, take the time to go around the house and conduct an inventory. Don’t overlook your personal items or valuable collectibles, such as art, jewelry or gadgetry, especially if they are rare or expensive. Your agent might suggest a “rider” for these to act as a kind of extra insurance that will cover their verified appraised value.

“Everything now has gone up in terms of cost of labor and supplies,” McGuckin says. Make sure your policy reflects these upgrades. Otherwise, you might be on the hook for replacement costs if disaster strikes.

RENOVATIONS THAT PAY Home Investments

Some additions to your home can actually lower your insurance costs. Updating your electrical system or your pipes, or replacing your roof, for example, can trim the cost of your policy, as a safer home means lower chance of damages. The same goes for installing a monitored home security system, centralized fire alarm or water-leak detector. A generator that automatically turns on when the power goes out cuts insurance costs as well, as burst pipes due to freezing are among the biggest culprits when it comes to claims.