“The bottom line is this: If your policy won’t pay enough to rebuild your home from the ground up—at today’s costs—as well as to replace your personal property, such as furniture and clothing, then you are underinsured.”
— The Wall Street Journal, October 2, 2024*
Market Value vs. Replacement Cost: What’s the Difference?
Market value reflects your home’s current real estate value—the price it would sell for based on location, neighborhood desirability, and market conditions. But this is not the amount it should be insured for.
Many homeowners—even financially savvy ones—mistakenly assume their home’s market value determines its insurance needs. But insurance is designed to cover the true cost of rebuilding or restoring your home (replacement cost) after a loss. Unfortunately, those building costs have soared in recent years. Since 2020, building material costs alone have increased by more than a third.
While some policies include automatic coverage increases meant to account for rebuilding cost inflation, these adjustments are broadly applied and may not reflect your actual needs. For example, construction costs may be higher than average where you live. Or you may have made significant investments in remodeling, renovations, and upgrades to your furnishings and amenities.
If your current broker, whom you may hardly know (and vice versa), is operating on autopilot and not in constant touch, you may be unaware of how your coverage limit was derived in the first place—or if it’s still adequate for your home’s true rebuilding costs.
How Traditional Brokers Profit.
As rebuilding costs go up, so does the amount of coverage needed, which, in turn, increases insurance premiums. This means more revenue for commission-based brokers. That’s because as much as 20% of your insurance premium goes to the broker—not your insurance carrier. Altus Partners doesn’t think this should be a factor in pricing your coverage or choosing the right carrier for your needs. Consumers should have control over how much their insurance broker is paid for the services they provide.
That’s why we’ve long been the nation’s only 100% commission-free corporate broker and the one leading the way in changing rules and regulations that prevent us from doing the same for individuals and families. By removing commissions—and the conflict of interest they create—from the equation, we are free to act in the best interests of every client. Transparently and objectively.
For now, commissions remain a part of the industry structure for individuals and families. Still, we bring the same level of transparency and objectivity to every policy review, ensuring your coverage is tailored to your unique needs—and your best interests. This includes getting quotes with higher deductibles when the premium savings are attractive, recommending smart home technologies—such as water leak detection systems or generators—that better protect your home while lowering premiums, and reviewing alternative insurers at renewal to find comparable coverage and service at lower premiums.
More Than Protection—Peace of Mind.
By talking with you to understand your unique needs, working with carriers who conduct home appraisals to determine proper coverage limits, and—most importantly—proactively engaging with you and providing regular reviews to ensure that your coverage is always up to date, Altus Partners helps you face the future confidently, knowing that the place you proudly call home is protected. And that whatever happens, we will always have your back with unwavering advocacy and claims support.
Schedule an Insurance Checkup Today.
If you’d like to know if your coverage is all that it should be, our homeowners insurance experts would be pleased to help you review your current policies and protections. And if you have questions about what sets Altus Partners apart from conventional brokers. Just contact us. Or call us at 610- 526-9130.
*If you’d like to see The Wall Street Journal article quoted above (“You Have Homeowners Insurance. Is It Enough to Rebuild Your House?” October 2, 2024), here’s a link to the article (subscription required): https://www.wsj.com/real-estate/homeowners-insurance-rebuild-house-e8c1af2c