According to a survey by insurance provider MSB, nearly 75% of all homeowners are underinsured. The average amount that homeowners are underinsured for is 18%.
However, many people don’t realize that they are underinsured, until it’s too late. According to Liz Weston, of MSN money -nationwide, it is often only when disaster strikes that many people learn the truth about their inadequate insurance.
“After every natural disaster, too many people discover an awful truth: They don't have enough insurance to rebuild their homes,” says Liz Weston.
Texas Insurance Agency, a Houston-based insurance provider, weighs in on the need for a comprehensive home insurance policy. “Homeowner’
Another risk with homeowners insurance, aside from inadequate coverage amounts, is that most homeowners policies don’t provide coverage on an all-perils basis. Many policies exclude flooding and windstorm damage.
“Home insurance protects from vandalism, theft and most weather related damage, but it doesn’t cover everything. In most cases, you’ll need separate coverage for flooding, earthquakes and other disasters,” explains Texas Insurance Agency.
While it may be devastating to discover you are underinsured after a disaster, it doesn’t have to be this way. Experts advise homeowners to purchase the highest cap that they can afford, and recommend that homeowners check with their insurers to make sure their policies provide adequate coverage –especially in high-risk areas that are prone to flooding, hurricanes, earthquakes, or wildfires.
Homeowners should also make sure their policy includes a “loss of use” clause. In case of a disaster, this will provide temporary accommodation while the home is being rebuilt. It’s also a good idea for homeowners to go for “replacement cost” rather than “actual cash value” insurance. This provides more coverage for personal belongings replacement. A policy that pays actual cash value, will pay out what the possessions were worth when they were destroyed, not what it would cost to replace them.
Don’t wait until it’s too late to find out that proper coverage was not taken out.
“Policies vary greatly,” continues Texas Insurance Agency. “It is important to check with your agent to find out exactly what your policy covers.”
Texas Insurance Agency is a Houston based insurance agency that provides insurance, and expert advice on homeowners policies. For more information, or to find out more about adequate homeowners coverage, visit Texas Insurance Agency today: www.insuranceagencytexas.com.