Skyrocketing assessment values may be leaving Victoria homeowners overjoyed but underinsured, according to a local insurance expert.
Lorie Zorn, who serves as the insurance services manager at Island Savings Insurance, said homeowners may unknowingly be at risk if their home insurance policy fails to keep pace with the Island’s rapidly inflating housing market. Disasters such as wildfires and earthquakes can do devastating damage to homes, and the cost to rebuild may not be covered under certain policies.
“Being insured to value guarantees you will be covered for the full replacement cost of your home and its furnishings if the worst happens and you have a significant loss,” said Zorn in a press release.
“In a real estate market like ours that is seeing rapid gains, ensuring you are covered for the current cost of replacing your home is essential so you won’t be out of pocket for the additional cost to rebuild or replace it.”
According to Zorn, the cost to rebuild one’s home differs from its value, and it’s important for homeowners to understand the replacement cost in case of a significant event.
“Many homeowners believe the replacement cost of their home is associated with the market and tax assessment value, which just isn’t the case,” she said. “With the increase in construction costs we’ve seen over the past decade, it’s particularly important to ensure these increases have been accurately reflected on your policy.”
Zorn also said when buying an insurance policy, homeowners have a tendency to get hung up on cost when they should be focused on the amount of coverage to ensure they are protected.
“As the cost of living continues to increase, many homeowners are understandably concerned about the cost of their policy and, in many cases, this becomes a major factor in the decision-making process,” says Zorn. “It’s important to view home insurance as an investment in protecting one of their largest assets.”
Lastly, Zorn said understanding how insurance claims are settled for loss or damage to properties is important and can differ between carriers.
“Policies specify how the property will be valued – usually either replacement cost or actual cash value,” she said. “They can also include specific conditions on how the property can be replaced or repaired as well as penalties that may apply if the property is not insured to its full value.
“It’s important that you understand what type of insurance you’re purchasing to avoid unnecessary penalties.”