|
The Insurance Information Institute reports that many American home
owners do not know what criteria were used to establish the coverage
in 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. It 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.
Copyright 2004
PropertySource Network |
