If your home’s market value has increased recently and the cost to rebuild your home in your region have remained constant – there should not be a direct effect on its replacement cost value. Increased market value of your home alone should not have to make major changes to your home insurance policy.
Notify your insurance agent when you make major renovations such as adding a room, gutting bathrooms and kitchens for improvements, and installing swimming pools – anything that would require a homeowner to get permits. If you have replaced that old kitchen with granite or upgraded the cabinets, likewise in the bathrooms that would be a significant event to increase your insurance coverage, specifically Coverage A also known as building or dwelling coverage.
Adding replacement cost value to your home by remodeling the kitchen with newer – more expensive – materials typically requires some updates to your home insurance policy, since the cost of replacing these materials could exceed your previous coverage limits.
The short answer is that anything that adds to rebuilding your home due to improvements should be added to the limits of your home insurance.
