house being rebuilt

What is Your Home’s Insured Value?

Suppose you paid $250,000 for your home two decades ago, or maybe you purchased your house last month. When it’s time to start looking for insurance, our advisors get asked, “Why is the insured value higher than what I paid for the house?” Insurance policies use a much higher amount as an insured value than your market value sale price. Why? Many people think of what they paid for their home as their maximum potential loss in a home insurance claim. There’s a bit more going on with the numbers, though, and it’s to the insured’s benefit.

Rebuild Cost

The simplest way to rebuild cost is the sum total of expenses needed to tear down the existing structure and rebuild your entire home from the ground up. If you paid $100,000 for your home 20 years ago, the chances are good that your home has gone up quite a bit in value. Why you may wonder? Well unfortunately the cost of pretty much everything has gone up since 20 years ago, and cost of materials and labour wages are no exception. Consider how much it costs to build another home just like yours: the cost of the teardown, debris removal, new materials (the lumber cost itself!), and the cost of labour.

What’s in the Insured Value?

Labour and transportation costs play a role, both increasing over time. Unique features of your home also weigh on the cost of rebuilding. Modern home insurance policies consider everything, from the number of floors and square footage to whether you’ve upgraded the kitchen and bathrooms. This method captures the value of your improvements and the money you invested when you bought your home.

Rebuild Statistics

Here are HWI; our offices use iClarify to determine your house’s rebuild value. We chose this system because it can access Canada’s most extensive claims and inspection information database. They are the most prominent third-party data aggregator of property information in Canada. By partnering with most municipalities, insurance companies, and real estate companies, they have built the most extensive database of property information possible. So, we have more information on Canadian homes and commercial structures to help us determine the most accurate value for rebuilding your home.

To get a replacement cost, iClarify does four things:

  • First, iClarify geo-codes the property, we get the latitude and longitude coordinates of the home, and we use that to provide accurate imagery, pull construction feature data and find comparable homes nearby.
  • Second, the iClarify user confirms the construction features of the home. This is a critical part of the process to ensure the data is accurate.
  • Third, the iClarify system takes the geo-code and confirmed construction features and finds the 100 closest, similar homes that we have inspected or have had a claims adjuster on site after a claim. So, we know the replacement cost for all comparable homes nearby.
  • iClarify then uses the data on the home and all comparable homes nearby to determine a replacement cost.

What can you do?

As the cost of materials and labour changes, contact your broker, as you should adjust your home’s insured value as well. Some policies offer automatic inflation-based adjustments as a built-in feature; you’ll often see this feature listed under ‘Inflation Protection’ on your policy documents.  Reviewing your coverage with your broker is always a good idea if you’re unsure about anything on your policy. We recommend contacting them once every year or every ten months to review coverages.

Also, if you make any significant improvements to your home, be sure to reach out to your agent or broker to be sure your policy covers the value of your new investment. Painting the bedroom — like you’ve been promising to do — won’t change the insured value of your home, but upgrading the bathrooms in the house could change the rebuild cost.

Connect with your advisor today to review the insured value of your home.


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