Do you have enough coverage to rebuild your home?
Key takeaways
- Most homeowners do not check whether their dwelling limit is still accurate until they have a claim, when it is too late to fix.
- Construction costs rose sharply in recent years and have stayed elevated, so limits set years ago often fall short.
- Labor costs and skilled trade availability continue to push rebuild costs higher.
- The DMV is affected more than most regions because local construction costs are among the highest in the country.
- Checking is straightforward. Capitol Benefits can re-run a replacement cost estimate on your DC, Maryland, or Virginia home.
Most homeowners don’t think about whether their dwelling coverage limit is still accurate until they have a claim — and by then, it’s too late. The gap between what your policy will pay and what it actually costs to rebuild has quietly grown for many homeowners over the past several years, driven by sustained increases in construction costs that haven’t reversed.
What the Numbers Look Like Now
Construction costs nationally rose sharply during and after the pandemic and have remained elevated. Labor costs continue to run high, skilled trades remain in short supply in many markets, and material costs across categories — lumber, drywall, roofing, and finish work — are significantly above where they were five years ago. According to our carrier partner Travelers, roughly 64% of homeowners are underinsured by an average of 18%. For a home that costs $300,000 to rebuild, that’s a $54,000 shortfall the homeowner discovers only after a total loss.
The DMV Factor
In DC, Maryland, and Virginia, construction costs run above national averages. Labor markets in this region are competitive, contractor availability can be limited after a major weather event, and the cost per square foot to rebuild in the DC suburbs consistently exceeds what carriers’ standard valuation models assume. If your dwelling limit was set several years ago — or if your insurer hasn’t run an updated replacement cost estimate recently — there’s a reasonable chance your coverage isn’t keeping pace.
How to Check Your Coverage
Your dwelling coverage limit should reflect the cost to rebuild your home from the ground up at today’s local construction costs — not what you paid for the house, not the market value, and not what it cost to build years ago. A few steps worth taking:
- Pull up your current policy and find your Coverage A (dwelling) limit
- Ask your agent to run an updated replacement cost estimator — most carriers have tools that use current local cost data
- If there’s a gap, ask about extended replacement cost or guaranteed replacement cost options to add a buffer above the policy limit
Capitol Benefits can run a coverage review for your home and make sure your dwelling limit reflects current rebuild costs in your area. Contact us here or call (301) 431-0000.
Frequently Asked Questions
How do I know if my dwelling coverage is enough?
Compare your dwelling limit against a current replacement cost estimate for your home, not its market value or purchase price. Your agent can generate an updated estimate.
Why has the gap between coverage and rebuild cost grown?
Construction material and labor costs increased substantially and have not reverted. Many policies only rose by small automatic inflation adjustments, which did not keep pace.
Do renovations affect how much coverage I need?
Yes. Finished basements, additions, upgraded kitchens, and new systems all raise rebuild cost. Unreported improvements are a common reason a limit is too low.
What happens if my home is underinsured at claim time?
You could be responsible for the shortfall between your limit and the actual rebuild cost. Some policies also reduce claim payments if coverage falls below a required percentage of replacement cost.
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