How to Avoid Underinsuring Your Home June 2, 2022
Your home is one of your greatest assets and a significant long-term investment. As such, it’s vital to protect your home and its contents with adequate homeowners insurance. Nevertheless, recent research found that many homeowners lack proper coverage.
Nearly 2 out of every 3 homes in America are underinsured. This means that the home is protected to an extent by a homeowners policy, but that policy doesn’t have sufficient coverage features to cover the full expense of a potential claim.
In this article, we’ll discuss how to avoid underinsuring your home.
How to Prevent Underinsuring Your Home
Don’t let your home become another statistic and suffer the devastating consequences of inadequate coverage in the event of a loss. Review the following guidelines to ensure your homeowners insurance policy meets your unique needs and can offer the best possible protection when disaster strikes.
Coverage Elements to Consider When Insuring Your Home
Homeowners insurance offers financial protection in the event of an unexpected disaster or accident involving you, your home, or your personal property. However, homeowners insurance policies consist of several different types of coverage. With this in mind, you must review each form of coverage included on your policy to make sure you are adequately insured for your specific risks.
Here are some key coverage elements to look out for.
Dwelling coverage is the portion of your homeowners insurance policy that can offer compensation for the cost of repairing or rebuilding the physical structure of your home if it gets damaged or destroyed by a covered event (e.g., a fire, a windstorm, or vandalism).
To secure proper dwelling coverage:
- Make sure you have enough coverage to compensate the full cost of rebuilding your home in the current market.
- Don’t forget any important features of your home’s structure when determining the cost of rebuilding (flooring, countertops, etc.).
- Be sure to recalculate the cost of rebuilding your home and review your coverage needs whenever you make changes to your home.
Other Structures Coverage
Other structures coverage is the portion of your homeowners insurance policy that can help cover the cost of repairing or rebuilding any detached structures on your property if they get damaged or destroyed by a covered event.
Similar to dwelling coverage, it’s crucial to ensure that you have enough other structures coverage to compensate the full cost of rebuilding any of your detached structures. In addition, be sure to reevaluate your coverage needs whenever you make changes to any of your detached structures or add a new detached structure to your property.
Personal Property Coverage
Personal property coverage is the portion of your homeowners insurance policy that can provide reimbursement for the cost of damaged or stolen items inside your home, such as furniture or electronics.
To ensure adequate personal property coverage:
- Review your policy to ensure you have the best form of coverage for your unique needs.
- Maintain an up-to-date home inventory checklist of all of your belongings and their original value, as well as an estimate of their current value.
Loss of Use Coverage
Loss of use coverage is the portion of your homeowners insurance policy that can help pay for temporary living expenses if you have to move out of your home while it’s being rebuilt or repaired due to a covered event.
It typically equates to up to 20% of the insured value of your home. That being said, make sure you consult your agent if you are concerned that such a value won’t offer enough financial protection for your temporary living arrangements.
Liability coverage is the portion of your homeowners insurance policy that can offer compensation for the expenses that may result if you are found liable for injuring another person or damaging their property. These expenses include medical payments, pain and suffering settlements, lost wages, legal costs, and death benefits.
Most homeowners insurance policies typically offer a minimum of $100,000 in liability coverage. But, depending on your risk, you may need to consider securing additional coverage. After all, various property features can increase your liability risks and require further protection.
We’re Here to Help
There are a variety of factors to consider when making sure you’re not underinsuring your home. Property Insurance HQ is here to walk you through your homeowners policy and help you secure ultimate insurance protection for your personalized risks. We ensure adequate coverage in the event of a homeowners insurance claim. For further insurance guidance, contact us today.
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