PHOENIX (3TV/CBS 5) - Blair Ballin and his family have lived in their north Phoenix home for 11 years and have never worried about their home insurance policy and how much coverage they have. "It's not something we think about on a daily basis," said Ballin.

Real estate market madness is everywhere

But things changed recently when Ballin's insurance agent suggested that he increase his dwelling coverage, and that's just what he did. Housing costs are up 14% during the past year, and lumber cost is up 250%. It means that building homes is a lot more expensive.

Phoenix-area homes

The cost to replace a 2,000 square foot home was around $240,000 three months ago. Now, that same house will cost about $310,000. 

Charlotte Burr, with the Arizona Insurance Team, said that the cost to replace a 2,000 square foot home was around $240,000 three months ago. Now, that same house will cost about $310,000. The Valley insurance agent just sent an email to clients telling them that because of the skyrocketing cost of housing materials, their current homeowners' policy may not have enough dwelling coverage if something should happen to their house.

"Even a home policy that's relatively new, like you bought your house in January and got a new home policy, those numbers could be completely outdated because it happened so quickly," said Burr. She added 90% of people are underinsured right now.

The recent wildfires are a perfect example of why homeowners need to act fast and adjust their policies before its too late, according to Burr.

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Ballin said it's not worth the risk. "It's a really big concern right now," said Ballin. "What if something happens, and more so, what if we're not covered for that?" Barr said an increase in coverage will lead to higher annual premiums that run between $15 to $200.


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