HOMEOWNER INSURANCE TIP

Don't be underinsured!  If you don't maintain enough insurance coverage and your home is damaged, your loss may NOT be covered in full!

Obviously, if the full cost of rebuilding your home is $100,000 but you only purchase a policy for $60,000 and your home is completely destroyed you will only receive $60,000.

But there is another impact of buying too little insurance.  If you don't have the proper coverage and only part of your home is damaged (for example, a hail storm damages your roof), you may not receive full insurance reimbursement for repairing that portion of your home.  This is true even though the cost of repairing only that part of your home would be much less than the face value of your policy.

So, if the full cost of rebuilding your home is $100,000 but you buy only $60,000 worth of insurance coverage and the cost to replace your roof is $2,000, you would receive less than $2,000 insurance reimbursement.  The actual amount would depend on how underinsured you actually are, or upon the wear-and-tear depreciation of that portion of your dwelling before the loss occurred.

To receive full reimbursement for your losses you should buy coverage for 100% of the replacement cost of your home.  The replacement cost is the amount needed to rebuild your home, not necessarily the market value.

Consult your insurance broker for more details and to determine if you are underinsured

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