Finding the right amount of insurance coverage for your home isn’t always easy. Learning about the details of your policy requires a lot of time, and it can often feel overwhelming for most people. Choosing to partner with an insurance agent is a great way to streamline this entire process while giving you access to experienced professionals in the industry that will help you find the best coverage to meet your needs.
What Does Being Underinsured Mean?
Being underinsured is simply not having enough home insurance coverage to protect you from a disaster or accident. Not having enough insurance will force you to pay a large amount of the repair costs, which can result in thousands of dollars. Not having enough insurance can even cause you to lose your house if you are sued. Unfortunately, many homes are underinsured, as some estimate that three out of five homes in the United States are underinsured by around 20 percent. Working with an insurance agent is important in getting enough coverage for your home.
Here are a few tips to consider to prevent underinsuring your home.
Avoid Only Getting Minimum Coverage
Many homeowners make the mistake of only buying the minimum amount of insurance coverage for their house. However, you will want enough coverage for rebuilding your home, replacing your belongings, and additional living expenses. Calculating the square footage costs of your home while multiplying this number with local construction costs can help give you an estimate of the cost of rebuilding your home. You can also use online calculators to gain another estimate. Reaching out to an independent insurance agent is the best option in helping you determine how much coverage you need for your home.
Update Your Policy After Making Renovations
Investing in home renovations is a great way to improve the value of your house. Some home improvement projects can dramatically increase your home’s value, which is why it’s important to notify your insurer to update your policy. Staying proactive by reaching out to your insurance provider will help you avoid being underinsured to ensure you are well-protected in all situations. It’s also recommended to contact your insurance provider if you make any type of additions, such as adding a new deck, building a swimming pool, or even purchasing a trampoline.
Create a List of Your Personal Items
Keeping an up-to-date list of your personal items is key to making sure you have enough insurance. These items are usually limited to $2,500 worth of coverage, as you may need to purchase extra coverage if you have high-value objects. For example, this may include jewelry, artwork, guns, coins, or antiques. Keeping up with appraisals and receipts of these items is also important in documenting replacement costs. It’s also a good idea to create this list outside of your home to avoid any damage, such as using a computer or mobile device to upload documents onto the cloud.
Double-Check Your Liability Coverage
Getting enough liability coverage for your home is key to giving you protection from a lawsuit. For example, you may need this coverage if someone is injured on your property or if your pet is responsible for hurting someone. Liability limits can range from $100,000 to $500,000, and $300,000 is often recommended for most homeowners. An insurance agent can work with you in looking at all your options to determine the right amount of liability coverage to meet your needs. Finding the right amount of liability insurance is especially important in protecting you against costly lawsuits.
Review Your Exclusions
Checking out the exclusions on your policy is also important in making sure you have enough coverage for your home. An exclusion is any peril or hazard that’s not included in your policy. One of the most common exclusions is dangerous dog breeds, as many insurance providers do not offer liability coverage for dog bite claims. However, other insurers will base their coverage on your dog’s history and behavior.
Other common exclusions include damage from hurricanes and tornados. You may need to buy an add-on to your policy to cover these damages. Checking your policy and understanding the details of the exclusions is key to making sure you have more than enough coverage. An insurance agent can work with you in comparing all of your options to find the best insurance coverage to meet your needs.
Check Out Your Endorsements
Endorsements are also known as a rider in the insurance industry, as it allows you to add or modify your existing coverage. For example, you can get an endorsement for owning expensive personal possessions. Adding sewer and sump-pump backup coverage to your home insurance policy is another wise choice, as it is a common homeowner’s claim that is nearly always excluded from a basic policy.
A home-based business endorsement is another option for providing additional coverage to your office equipment and other property. However, you will need a separate commercial business policy if you operate a full-fledged operation from your home, such as a daycare or dog grooming business. Discussing your situation with an insurance agent is important in finding the right amount of home insurance coverage.
Understand Differences Between Actual Cash Value and Replacement Cost
You can insure your home with either an actual cash value or a replacement cost policy. An actual cash value policy will pay for the costs of replacing your different belongings while including depreciation. On the other hand, a replacement cost policy will reimburse you for the entire cost of replacing your items. Typically, the cost of replacement cost coverage is around 10 percent higher than an actual cash value policy, but it’s well worth the price to ensure you receive the full value of your belongings without factoring in any depreciation.
Consider Flood Insurance
Flooding is a major risk for anyone living in Florida. Choosing to purchase flood insurance is often a wise decision, even if you don’t live in a flood zone. A standard insurance policy for homeowners doesn’t protect you against floods, as you will need to buy a policy with the National Flood Insurance Program (NFIP) or use a private insurance company. Working with an insurance agency is helpful in finding the optimal amount of flood insurance to ensure you are well-protected against mother nature.
Contact Your Insurance Agent
Trying to figure out the right amount of coverage for your home can be stressful. Reaching out to your insurance agent to perform an analysis of the replacement cost by calculating the quality of your existing construction, personal items, and any special features is beneficial in finding the correct insurance coverage. These experienced professionals can provide you with guidance on how to figure out the amount of insurance coverage you need to avoid being underinsured.
Find the Right Amount of Coverage by Using Wellcovered Insurance
Wellcovered Insurance is an agency that partners with over 30 insurance carriers across the United States. We proudly serve clients in Seminole and Volusia Counties, as we are one of the highest-rated agencies in the area. You can also visit our local office, as our team is always happy to answer any of your questions and offer personalized services that aren’t possible at other agencies.
Our focus at Wellcovered Insurance is to make it easy for you to find the right insurance coverage to meet your needs and stay within your budget. You can choose from many different types of insurance, whether you need vehicle, RV, motorcycle, condo, commercial property, and much more. You can easily receive an auto insurance quote in 15 minutes, and we can give you a home insurance quote in one to two business days.
We also stay active in the community, as we are members of the West Volusia Regional Chamber of Commerce, and we are also proud partners in the Deland Breakfast Rotary.
Feel free to give Wellcovered Insurance a call today to learn more about finding the right insurance coverage for your home!