Exclusively from Foa & Son
This perennial topic is worth revisiting periodically; it comes to the forefront again driven by events following large natural catastrophes we have seen recently blizzards and ice storms and southern tropical storms all illustrate the problem.
Building (and rebuilding) costs have increased steadily over the past twenty years. The rise has been most dramatic in habitational type structures, but no class of buildings are immune to the many factors that are driving up building costs. Cost of building materials of all types are higher than ever, labor costs continue to creep upward, and, less visible but increasingly important, building codes continue to get more stringent, driving up the costs of any major renovation or construction.
Property owners who have not been diligent in keeping the amount of insurance they carry on their properties up to date can still survive an underinsured loss when the cause of loss is a single event, like a fire. Rebuilding may be delayed or prolonged while they shop for bargains and haggle with contractors, there may have to be some compromises on quality or standards, and additional financing may be needed, but usually the building can eventually be rebuilt or repaired.
Should the same loss take place as part of a larger natural catastrophe (wildfire, tornado, hurricane), all bets are off. Inevitably after such events, rebuilding costs rise as demand spikes. No deals are to be found on material costs, and busy contractors command top dollar.
Even now, property insurance rates are a relative bargain compared to other lines of insurance. It only makes sense to be sure that the limits you carry on your property coverages are adequate to cover the worst case scenarios.