(10/13/2011) Erate Exclusive - Two-thirds of homeowners with property damaged in a disaster
don't have sufficient homeowners insurance coverage, says one study.
Another claims 64 percent of the homes in the U.S. -- 48 million
properties -- don't carry enough coverage to fully reconstruct the home if
it's destroyed.
And don't think your home is better off because home values have
tumbled.
Your coverage should consider replacement cost, not market price. What it
would cost to rebuild your home, should it be destroyed, could be much more than your home's appraised
value.
Consumer Reports is advising
homeowners to use this year's natural disasters as a wake-up call.
"Ask your insurance agent for a customized estimate of your home's
replacement cost that accounts for its unique features, construction
details, and age, as well as any costs due to local building-code
requirements," CR advises.
For less than $10, AccuCoverage.com lets you check for yourself and compare
the results with your current policy.
CR says you should reassess and update your homeowners insurance needs every few years and carry
"guaranteed replacement cost" coverage. Insurers also offer "extended
replacement cost" coverage which will extend your limit, if necessary, by 25
to 100 percent to cover any increases labor and materials costs. Also, a
"law and ordinance" rider will pay the extra cost of complying with updated
building codes.
Other CR advise includes:
• Get coverage for local risks. Standard policies don't cover
damage from floods, earthquakes, sinkholes and landslides. In some areas
deductibles are up for wind damage from hurricanes, tornadoes or severe
windstorms.
• Shop smart. Don't shop for the best rate and then determine your
needs. Know what coverage you need first then go comparison shopping. CR
says annual premiums can vary widely. Check your state insurance regulator
for rate comparisons as well as websites, including Insure.com, InsWeb and
NetQuote.
Trim costs by taking on high deductibles; by buying all your insurance needs from one company; and by keeping your
credit rating as high as possible. Also if your can't afford catastrophic
coverage, check with your state's insurance of last resort program.
CR says, choose an insurance company rated "A" or "B" by Weiss Ratings
available online at The Street.com
• Prevent losses. Retro-fit your home to better withstand the
seismic forces of an earthquake, the gale forces of a hurricane or the burn
threat of a wildfire . The Insurance Institute for
Business & Home Safety offers more tips for reducing losses.
A detailed inventory with receipts, videos and photos will help smooth
the claim procedure, should you need to file. The Insurance Information
Institute will let you store your inventory for free.
• File smart claims. Don't make claims for small losses if you have
high deductibles or can afford to pay for the damage out of pocket. Make
necessary repairs to stop further damage. Work closely, in a non-adversarial
role, with your insurer. Consider the help of United Policyholders or the National Association of Public Insurance Adjusters.
