Liberty Mutual Expands Home Replacement Cost Coverage for Calif. Catastrophe Victims

When this year’s wildfires rage across California, will a home insurance policy be enough to pay to repair or rebuild a damaged house? Maybe … but maybe not.

Yet some California homeowners are reportedly less concerned today than their neighbors, as a result of the California Department of Insurance’s recent approval of a Liberty Mutual insurance policy with a new “catastrophe trigger” that expands home replacement coverage from 135 percent of value to 175 percent.

“Losing your home hurts. Not having enough insurance coverage to rebuild it devastates,” said Tom Jones, Liberty Mutual senior vice president and Pacific Region general manager. “In the wake of a catastrophe, the normal cost for construction goods and labor may explode, which means your $400,000 home could cost $550,000 … $600,000 … or more to rebuild. Our customers can’t be left underinsured because supply-and-demand economics cause the marketplace to temporarily inflate.”

Covered natural disasters after the July 27, 2005, effective date will trigger — at no additional cost — the home replacement coverage increase for homeowners who purchase the Liberty Mutual expanded replacement cost endorsement. Ninety percent of Liberty Mutual’s California customers reportedly carry the eligible policy.