How to Tell If You Are Underinsured

Thursday, March 16, 2017, 6:00 AM | Leave Comment

It is crucial to make sure that you have the correct amount of home insurance coverage, to make sure that you are covered 100 percent in case the worst ever happens.

As the saying goes, you want to hope for the best, but prepare for the worst. This is definitely true in regards to insurance coverage for you, and your loved ones.

• What is the correct amount of homeowners’ insurance needed?

  When trying to decide, or figure out how much insurance you need for your home, it can be a bit tricky to figure out.

  There are four main components to figuring out just how much insurance is needed. These components are:

  1. How much insurance will you need to cover the structure of your home and garage(s)?

  2. The second factor would be, what is your liability to others? Whatever that may be, you want to make sure that it is covered.

  3. Next, you want to add up all your personal possessions, and their value. If there is no legitimate value with your possession, you will want to get it professionally valued and certified.

  4. The last thing you want to make sure is covered is, what is your additional cost of living and expenses, if your property becomes damaged and you are forced to live somewhere else temporarily during the repairs?

  These four questions must be answered accurately if you wish to have enough insurance to cover everything. It also helps to learn how to save money at home.

• How much will a rebuild cost for your home?

  For a more generalized idea of how much insurance you will need to cover your residence, you will multiply the total amount of square footage of your house by whatever the local building and construction costs for your area are per square foot.

  You can find average building costs in your community by talking with either, the builder’s association, an insurance agent, or a local real estate agent.

  There are several factors that determine the overall cost to rebuild your home or residence. These factors somewhat vary.

  These include:

  • What is the average construction labor cost in your area?

  • The total square footage of your estate.

  • What the type of construction is your exterior walls made from? Frame, veneer, masonry, brick, stone, etc.

  • What is the total number of bathrooms and rooms over-all within your home?

  • What type of roof you have, and what it is made from?

  • What style type your home is.

  • If there are any other structures, like barns or garages on your property.

  • Is any part of your home custom built of fabricated? Have you made any improvements to your home since you purchased it?

  • And the last thing being, does your home have a fireplace, arched window, custom trim, and other things like that?

• Personal possessions

  For the most part, most homeowner’s insurance will cover your personal belongings and possessions for about 50%-70% of the amount of insurance that you have on your home overall.

  Limitations for this are usually found on the Declarations Page, within Section I, Home Coverage.

  According to this home and contents insurance site, conducting a personal inventory of all the possessions in your home is a must, and the only true way you will be able to make sure you have sufficient insurance for all of your belongings.

  This inventory would consist of a detailed list of everything you own, as well as the documents and information relating to those items cost.

  You want to make sure you have all necessary information and documents for the purpose if they were ever stolen or got destroyed by a natural disaster. This may seem like a lot, but there are programs out there than assist and help you with this.

  If you still feel unsure, and don’t think you have enough coverage for all of your possessions, it is highly recommended to call your insurance company, and ask them to raise your limits for personal possessions.

• Car Insurance

  The amount of insurance needed to cover your vehicle depends on whatever state you live in.

  Most states have a minimum amount of vehicle insurance that is needed to be able to legally drive your car on public roads, though some states do not.

  Car insurance as a whole, has many sub-insurances you can, or may be required to have. These would be like having underinsured or uninsured motorist insurance, accident bodily injury liability, property damage and liability.

  Even though some states have requirements for coverage you need, it is not recommended to just get the bare minimum to stay legal, because it can cost you in the long run, like when you have to pay out of pocket for expenses.

• Umbrella Policies

  Umbrella insurance is highly recommended if you have both a home and car, or in better terms, assets.

  The great thing about umbrella insurance, is that, it becomes enacted once you have reach the limits on either your home or vehicle insurance, and it will cover whatever is not by those two policies.

  The yearly cost for this coverage is substantially low. It’s about one million dollars of coverage, coming with an annual cost of about $125-$200 per year.

Being underinsured is a risky place to be. You want peace of mind, which is what adequate home insurance gives you.

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