Inflation causing some Arizona homeowners to be underinsured
PHOENIX (3TV/CBS 5) - With the threat of wildfires across Arizona, it is time to check your homeowner’s insurance policy. The cost to rebuild after a disaster is rising, and because of the pace of inflation, many homeowners may not realize they are underinsured.
Lisa Cooper was forced to rebuild her childhood home in Phoenix after a devastating fire. “Someone was pounding on my door,” she recalled. “I opened the door and my neighbor said, ‘Your house is on fire!’ And I’m like, ‘What are you talking about?’ And she said, ‘Lisa, your house is on fire. Get your mom out.’”
Cooper and her elderly mother escaped to safety. “I looked back, and the house was engulfed in flames. I just couldn’t believe it,” she said. The flames claimed so much. “The next thing I know, the fire crew calls me back over and says, ‘Lisa, we need to call a board-up company; who do you want to use?’ I had never heard that term before,” Cooper said. It was the beginning of a daunting process to return home that spanned 1,018 days and three separate contractors. There were project delays because of COVID-19, and supply chain issues made the house more expensive to rebuild. Cooper says she spent $25,000 out of her own pocket because she was underinsured.
“I think most people are underinsured,” said Pam Johnson, a State Farm insurance agent. “As prices go up for lumber, concrete, even the price of labor, all of that goes into rebuilding your house, so if you are underinsured, we may not have enough money to put your house back.”
To make sure you are properly insured, you must determine what it would cost to replace your house. “I think a lot of people are looking online, hey, the value of my home is this, or the neighbor sold it for that, but that includes the land. It also includes curb appeal, so when you look at your insurance policy, that coverage is probably going to be slightly lower,” Johnson said. “We use the square footage. We use the features that are in the house, whether the ceilings are vaulted or not, whether there are beams. We get very detailed.”
Lisa was able to salvage some of her belongings. Even a piece of wood that was part of the original house is displayed in her new home. “I wish now that I had understood my insurance coverage better,” she said. “You think you don’t have time, but you have to take the time, especially nowadays because everything is so expensive.”
It’s important to take an inventory of your home so you know what you had in case you need to make a claim. Open up drawers and closets and take videos of everything.
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