Often it is after the fact that many people discover that they didn’t have adequate coverage under their “home owner’s insurance”. Many homeowners may find that their agents had used computer surveys to calculate their “home owner’s insurance quote” and thus grossly underestimated the values of rebuilding their homes. According to MSB, an insurance service firm, about 68% homeowners are under-insured by about 18% of the value of their homes. That means if your house costs $300,000 today, and you had to rebuild it because of a natural disaster such as fire or hurricane, then you will find yourself short by at least $54,000. This will be worse if the rebuilding costs are higher in your area.
So if you are pondering whether you have adequate amount of Home owner’s insurance or not, start with looking at declaration page of your policy. Compare the estimate with your home owners insurance policy limits and ask your agent to explain any discrepancies.Regular homeowners insurance will cover damages from fire, tornado, lightening strike during thunderstorm but it may not cover flooding, acts of terrorism, earthquakes and hurricanes. Consider Flood and earthquake insurance if you live in areas prone to these disasters. If you are not satisfied with your “home owner’s insurance quote”, then shop elsewhere. While the price of the home insurance policy is important, you cannot leave your most valuable asset under-insured.
Your “home owners insurance” policy should cover the structure of your house, all of your belongings, liability coverage for others in case they get hurt on your property, as well as your living expenses in case your house becomes inhabitable. The home owners insurance quote must include adequate “fair market value” of your possessions so that you can replace them similar or newer items after the loss. But many “home owner’s insurance” policies place a limit on the amount you can collect on big ticket items such as television, computer, and jewelery. In that case you should invest in “floater” or “endorsement” policy for each of these items. These policies may even replace these items in case they are lost or stolen.
Always upgrade your policy according to the current value of your home. Also if you make improvements or additions to your property make sure they are added to the total coverage under your home owner’s policy. If you own a condominium, you may need home owners insurance to cover everything “from drywall in”. For details contact your condo association.
Also consider an “umbrella policy” to help with liability claims. Your “home owners insurance quote” may top at $300,000, however the claims are usually in the range of $1000,000 and above. At an additional cost of $200 to $400 per year, the umbrella policy would add peace to your mind by picking that extra liability coverage to your home and auto.
Be sure to stay current on your “home owners insurance” based on the market value of your home and possessions inside your home. Your home owners insurance should always keep pace with inflation, so you can rest assured in case the disaster hits.