A side effect of the Covid-19 pandemic could be the protection offered by your home insurance.

You are no doubt aware that two consequences of the pandemic are increased demand for housing and shortages of many building components and supplies. Skilled labor to build houses is also scarce.

The result is that the cost of building a house has gone up. The increase has been dramatic in some areas. This means that the cost of rebuilding or major repairs to your home due to a disaster has likely increased.

You should review the coverage limits in your insurance policy. Most politicians say they will pay the cost of rebuilding the house if it is destroyed. But there is usually a maximum amount that the insurance company will pay.

Many insurers automatically adjust the maximum each year when a policy needs to be renewed. Others don’t.

In either case, you should review your policy limit and be aware of the increased rebuilding costs in your area. Figure out how much it would cost to build your house in today’s market.

You will likely find that the maximum coverage limit on your policy is 20% or more less than what it would cost to completely rebuild the house if it is destroyed by fire or other disaster. Adjusting the policy limit will increase your premiums a bit. But it will be cheaper than having to put your hand in your pocket to pay part of the cost of rebuilding the house.