If you have recently completed an update to your home, is your homeowner’s insurance still providing adequate coverage? You could be in for a shock if you file a claim and learn that the coverage on your home hasn’t kept pace with home values especially the worth of your home following a major update.
A 2008 survey by researcher Marshall & Swift revealed that 96 percent of people have homeowner’s insurance. However, some 64 percent of U.S. homes are undervalued for insurance purposes reports USA Today.
That is significant even as home prices have steadily fallen over the past several years. Homeowners may think that their coverage is sufficient, but skyrocketing material costs can more than erase that difference. Lumber costs have been rising steadily, but so have materials that are petroleum-based such as roofs. Whenever gas prices rise, figure that the cost of materials will rise too. With gas now selling at $4 per gallon, the cost for replacing a roof has increased as well.
Annual Policy Review
You can ensure that your home is always adequately insured by reviewing your limits once a year. That may mean contacting your insurance agent annually for a policy check up, including discussing any updates to your home. Even without an update you may have acquired many valuables through the settling of a relative’s estate. Tell your agent about the priceless artwork hanging in your living room.
Understand your policy’s inclusions and exclusions. Never assume that everything in your home is fully covered or even covered at all. You want your policy to include the replacement cost for your home and you should have an inflation guard in place, one that automatically adjusts rebuilding costs each year. Many policies include only the home and garage itself. A work shed, swimming pool or enclosed gazebo may require a separate policy.
If your home is damaged by a tornado, then the policy’s wind damage should be sufficient. However, if your home is damaged by a hurricane and incurs flood damage, then your insurance coverage may not be sufficient. Homeowners living in flood prone areas should buy flood insurance from the federal government, but sold through insurance agents. Keep in mind that there is a 30-day waiting period on new flood insurance policies. You can have your home’s contents only insured, the building only or both. Visit FloodSmart.gov for more information.
Finally, if you are not sure that your insurer understands the per square foot cost to rebuild your home, you may want to consult with a contractor who is familiar with your neighborhood notes MSNBC. Homes in high-end neighborhoods in particular can cost much more to replace and you need the right insurance to ensure that your policy doesn’t fall short when you need it.
Written by Matthew C. Keegan