Your house is arguably your biggest asset considering it’s a huge investment. Therefore, your home must have proper protection. Home insurance is one of the easiest ways to ensure that your house has the financial security it may need in case of an emergency.
But, what does a homeowner do if their house doesn’t have sufficient coverage? Oftentimes homeowners don’t even realize they’re underinsured until they try and file a claim. Therefore, you must ensure that you have sufficient insurance coverage, which is why we’re going to point out some indicators that may help you decide.
In this article, we’ll discuss three instances where your home may be underinsured. Let’s begin.
Is Your Georgia Home Underinsured?
Do You Have Enough Coverage to Rebuild Your Home?
While people must get a home insurance policy to satisfy their lenders, they’re still just as important after your home is paid off. First, you need to make sure your policy will cover the cost to rebuild your home. Keep in mind, it must fall under one of the covered perils.
Oftentimes homeowners assume their replacement value is whatever their home is currently worth. However, this isn’t the case. Another instance can occur where a homeowner neglects to inform their provider of some remodeling they’ve done. As you know, updating your home will increase the value, which means you may need more coverage. If something were to happen, your home may not be fully covered.
So, talk with your provider and figure out how much coverage you need in case your home were to be destroyed.
Consider the following when doing so:
- Replacement Cost
- Extended replacement cost
- Inflation guard
- Law coverage
- Water back-up
- Flood insurance
Do You Have Enough Coverage to Replace Your Personal Belongings?
Your home is not the only thing that can be damaged in the wake of an accident. It’s likely some of your possessions may be damaged from a fire, natural disaster, or flood. Therefore, you should take inventory of all your valuable items.
Next, determine the cost to replace the items if they were destroyed or stolen. Most home insurance policies will cover the costs to replace your items up to a certain limit. Oftentimes these limits aren’t high enough. Therefore, you may want to purchase additional coverage if you own a lot of valuable items.
Additionally, there are two ways to determine the coverage amount for your possessions. You can either go with an actual cash value or replacement cost policy. It’s best to consult with a professional to determine which of these insurance plans is more suitable for you.
Do You Have Enough Coverage for Additional Living Expenses?
Losing your home means you may need to live elsewhere until your home is rebuilt. However, staying in any other place means you’ll bear expenses. This may include hotel bills, restaurant meals, transportation costs, and other miscellaneous expenses. Similarly, if you rented out a part of your house, you’ll be reimbursed for the rent you would’ve been collecting.
However, you should know that this won’t cover expenses like your mortgage or grocery store trips.
The coverage amount for additional living expenses varies from company to company. Talk with your provider and see what coverage options they have to offer you.
Bottom Line
In conclusion, having your home underinsured can land you in some serious financial trouble. Therefore, ensuring that your policy covers the replacement of your possessions, replacement costs for your home, and additional living expenses is a great way to keep yourself financially secure.
We also suggest discussing the technicalities of the policy with your provider in detail to avoid any unwanted surprises later on.
Source
https://www.iii.org/article/making-sure-your-home-properly-covered-disaster