JACKSONVILLE, Fla. – It was a wake-up call for hundreds of homeowners in Los Angeles County who discovered their property insurance wasn’t enough to cover the full cost of rebuilding their homes after disaster struck, and Floridians could face a similar hidden challenge.
According to a new study from the Insurance Information Institute (Triple-I), the cost to rebuild a home has surged by 55% from 2019 to 2022—nearly four times the rate of inflation. This means many homeowners in Florida may no longer have enough insurance to fully cover the cost of rebuilding their homes in the event of a disaster.
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Mark Friedlander, the director of corporate communications for the Triple I, attributed this massive increase in replacement costs to supply chain issues, expensive materials like lumber, and labor shortages. While replacement costs have moderated slightly since 2022, Friedlander says the damage has already been done.
“The replacement cost increase of 55% is nearly four times the consumer price index over that four-year period. That means the cost to rebuild is significantly higher than it was just a few years ago. This is crucial because the last thing you want is to discover you’re underinsured when disaster strikes—whether it’s a hurricane, wildfire, or another catastrophe.” said Friedlander.
Friedlander cautions that many homeowners, especially in disaster-prone areas like Florida, may be unaware that their current insurance coverage may fall short of covering the full replacement cost of their homes.
So, how can homeowners determine if the replacement cost on their insurance policy is adequate—or even too high? The answer lies in understanding your home’s square footage and the cost to rebuild.
News4JAX spoke with local insurance agent Matt Carlucci Jr. from Brightway Insurance, who advises homeowners to review their coverage every few years.
“Years ago, we’d typically insure a home for about $125 a square foot unless it was a custom, high-value home. Today, it’s rare to see a home that costs less than $200 a square foot to rebuild. That increase is substantial, and it’s important that homeowners adjust their policies to reflect this higher rebuilding cost.” said Carlucci.
Carlucci recommends that homeowners who have owned their homes for more than three years should check their dwelling coverage to ensure it matches current rebuilding costs.
For homeowners looking to save on their insurance premiums, Carlucci offers a few tips, including:
- Lowering your content coverage
- Removing replacement cost coverage from your contents
- Raising your deductible.
“By lowering your contents coverage and raising your deductible, you can significantly reduce your premium. It’s all about balancing the right amount of coverage for your home and your budget,” said Carlucci.
Experts also stress the importance of not confusing your home’s market value with the replacement cost. Carlucci notes that the two are completely different.
The market value of your home includes factors like location, curb appeal, and demand, while the replacement cost is strictly about what it would cost to rebuild your home from the ground up.
Each year, dwelling coverage typically increases by about 4%, but that may still fall short of covering the true cost of rebuilding.
Experts are urging homeowners to review their insurance policies regularly, especially given the sharp rise in replacement costs. If you haven’t updated your coverage recently, now is the time to check that your dwelling coverage is sufficient to rebuild your home in the event of a disaster.
Don’t wait until it’s too late—make sure you have the right protection in place to safeguard your home.