Are You Covered?

What you do not know about insurance can really hurt you. Many home owners today do not know what criteria was used to establish the coverage on their policies. In fact, many not only lack financial protection for the equity in their homes, but for personal property as well.

The last thing you expect after paying homeowners’ premiums for years is that your insurance coverage is not adequate to rebuild your home in case of a total loss. And don’t think that can’t happen to you. Weather changes around the country have produced severe weather occurrences. Every day you hear about floods, tornadoes, earthquakes, hurricanes and violent wind storms causing millions of dollars of damage as well as lost lives as these weather systems race across our nation.

Inadequate insurance coverage usually happens because lenders only require home buyers to carry enough insurance to cover the value of the mortgage. Then, in the event of a catastrophe, the lender’s investment is covered. Unfortunately, this required insurance is only for the lender’s money; it does not cover the homeowner’s personal property or their equity.

When deciding on insurance, home owners should carry enough to cover the replacement value of the home and all its contents. The key word is replacement. As your home appreciates, so will its replacement cost, so it is a good idea to review your policy each year or two, adjusting the amount of coverage as necessary.

• A word of caution, however; do not insure for more than the value of your real and personal property, because an insurance company will not reimburse more than the replacement value of the property.

Many home owners tend to underestimate the value of their property. When calculating the replacement cost of your home, you need a professional estimate of what it would take to rebuild it at today’s cost for labor and building materials. To be adequately protected, you will want to insure your home for 100% of its replacement cost. Few home owners think about their policies until disaster strikes. It’s wiser to be proactive; get the coverage you need before you need it.

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