Between rising construction costs, material shortages, and an increasingly competitive real estate market, many Ontario homeowners have seen the value of their homes jump in the past few years, sometimes by hundreds of thousands of dollars. But while most people celebrate increased property value, very few stop to consider whether their insurance coverage has kept pace.
Home insurance is tied to replacement cost, not resale price, and that means your policy is meant to rebuild your home as it stands today. If your home’s value has gone up due to renovations, additions, upgraded finishes, or simply inflation, there’s a chance your policy is now underinsuring your property without you realizing it.
Why Replacement Cost Matters More Than Market Value
Real estate prices reflect what someone would pay for your home. Insurance reflects what it would cost to rebuild it from the ground up. Those two numbers can be very different.
Increased construction labour rates, higher lumber and drywall costs, supply chain delays, and upgraded interior finishes all mean a rebuild today could cost far more than it did even a few years ago. If your policy hasn’t been reviewed recently, it may still be based on outdated assumptions, which could leave a coverage gap in the event of a major loss.
Common Situations Where Coverage Falls Behind
Many homeowners don’t realize their insurance hasn’t kept up until a claim is already underway. Some of the most common triggers for underinsurance include:
- finishing or remodeling a basement
- adding a bathroom or structural addition
- replacing flooring or cabinetry with higher-end materials
- upgrading kitchens
- exterior landscaping or hardscaping that increases permanence and value
- installing a backyard office, studio, or outbuilding
- major energy-efficiency upgrades like windows or roofing
If these changes weren’t disclosed or reviewed with your broker, your insurance company may still be working off your home’s “old” valuation, even though the rebuild cost has since increased dramatically.
The Risk of Being Underinsured
If a fire, major water loss, or storm were to damage your home significantly, your insurance settlement is tied to the coverage limit on your policy. If that limit is lower than the true rebuild cost, you may have to pay the difference out of pocket – which can amount to tens or even hundreds of thousands of dollars.
This is why scheduled reviews are so important. Insurance isn’t meant to be “set and forget.” Your home changes over time, and your coverage should change with it.
How an Insurance Broker Helps Protect You
One of the biggest advantages of working with a broker is that you aren’t left guessing whether you’re properly covered. Brokers regularly review your policy, account for renovations and improvements, and adjust your limits so your coverage stays aligned with today’s rebuild costs.
A broker can also walk you through how each upgrade affects replacement cost, which carriers offer extended rebuild protection, and which policies include inflation safeguards – giving you options you won’t find through one-size-fits-all insurance portals.
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If your home has changed in value – whether due to the market, renovations, or modern upgrades – your insurance should reflect that new reality. An up-to-date policy protects both your investment and your peace of mind. If you’re unsure whether your current coverage matches your home’s true rebuild cost, we’re here to help. Our team can review your current policy, assess whether your home is adequately insured, and make sure your coverage keeps up – just as your home has. Get in touch, today.
