Home Insurance Forum

May 19, 2007

I have a homeowners replacement policy on contents and structure, and my home totally burned last week. The replacement cost of the home exceeds my policy limits by about 30 percent. The reason is that we finished the basement, which added about 30 percent to the value of the house.

We were told to call when we finished with the upgrades and the policy would be adjusted. Will this still be the case? I was shocked to see how much the replacement price has gone up in just two years.

David, Georgia

Dear David,

Whenever any improvements are made to an insured dwelling, the insurer should be alerted immediately so your coverage can be adjusted accordingly, which will cover the loss adequately.

Representatives for your insurer, Allstate, could not be reached for comment. But State Farm Insurance Co. spokesperson Phil Supple says unless your policy was adjusted before the fire to reflect the increased value of the home, you probably won't be reimbursed for the cost of the basement.

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