You’ve got home insurance, but that doesn’t always mean your property is properly covered. Stats show nearly 2 out of 3 homes in the US are underinsured. But how does this happen – And more importantly, how can you stop it from happening to you?
How Does Underinsurance Happen?
While we like to think people dream about insurance daily, we know that’s probably not the case. And many homeowners don’t remember to update or periodically increase the coverage on their homes, leaving them underinsured. So, if you’ve been binging HGTV lately and have home improvements on the mind, or if you’ve recently updated your kitchen or replaced that old roof, you may need to make a call to your Insurance Agent to update your coverage.
What Leads to Being Underinsured:
- Misunderstanding your policy and what’s really covered
- Undervaluing your property
- Not increasing sub-limits
- Forgetting to account for construction costs
Making Sure Your Home is Properly Covered
One of the most important things you can do is to never underestimate your risk for catastrophe. With prices and premiums up right now across the country, it can sway some decisions to cut back. But don’t forget the price of loss has also increased. So, if you’ve skimped on coverage to save a few bucks, you may be in for a harsh realization if you do experience a loss.
Other things to consider:
Checking construction costs. Your home should always be insured for the amount it would take to rebuild it. And with construction costs climbing year after year, it’s important to revisit your policy with your Agent annually.
Fully insuring your personal property. Think kitchen appliances, electronics, furniture, clothing, and more. These items can quickly add up and it’s important to keep a home inventory list to track it all. Default personal property coverage (Coverage C) can be anywhere from 10 percent to 75 percent of the building replacement value, depending on your insurer. But you’re able to request it be as high as 100 percent.
Insuring your homes actual cash value or its replacement cost and reviewing sub-limits are other coverage areas to familiarize yourself with and that can help pay off in the long run.
Don’t Get Caught Underinsured
Understand your policy. Know what’s covered, what exclusions or limitations exist and how one policy works to fill gaps of another (I.e., pairing a homeowners policy with Home Equipment Breakdown Coverage or a flood insurance policy).
Most importantly, speak with your Agent if you’re unsure or to learn more.