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How to Make Sure Your Home Isn\’t Under-Insured
by
Laura Lyons
Most homeowners out there actually have home insurance. But how much insurance is enough? Ensuring enough coverage is one of the most confusing things homeowners face. If something really terrible happens, will you have enough coverage to totally rebuild from the ground up? It s not hard to think about the worst case scenario but it is better to be prepared than sorry. Here s where making informed decisions regarding your home insurance policy comes in. It is a very important process that should not be overlooked. Read on to find out how you can make sure your home is not under insured.
When it comes to insuring your home, many people and nearly half of all homeowners believe that the insured value of their homes reflects a market value. However, they are two different and separate things that don t really have an effect on one another. When it comes to buying insurance for your home, you have to look specifically at the insured value, which is the cost of rebuilding the home in its current location with comparable construction materials from the ground up. Meaning, you have to take into account that you have totally lost that home and nothing is salvageable. The cost of building materials such as steel and concrete all have gone up these couple of years, due to high production costs.
People don t realize that market value vs. replacement costs. A couple in New Mexico made this mistake when their home was way under-insured. For one, he had coverage for only $300,000 but the estimated construction cost was actually at $500,500. In most other situations, the insurance company would do their best to help, but in no way can about 200,000 dollars worth of home construction be made up. In the end, the re-construction of the home did not have the quality of the original home. Downgrading kitchen appliances, roof quality, and other building alternatives had to be done.
So, it s smart to thoroughly review your insurance coverage each year before your insurance policy automatically renews. Most people end up overlooking this. It is your responsibility to add highly valued items to your list of insured items in your home. At the bare minimum, you should at least know what you have insured, and then go through everything to make sure you don t want to add or edit anything.
The four most important elements and factors that will help you decide how much coverage to get are: The cost to rebuild the structure in its entirety, the cost to replace the contents (possessions, appliances, and belongings), additional living expenses if you need a place to stay during repairs or rebuilding processes, and finally, your liability to others who might get injured on your property (workers, builders, etc). Don t be cheap about coverage because you may end up spending a lot more money in the long term should something happen to your home.
Keep an up to date home inventory list to show the
home insurance company
. Although there may be higher rates for home insurance this year, you can always
compare home insurance quotes
to pick the most comprehensive policy for you and your needs.
Laura Lyons
Article Source:
ArticleRich.com
