by Broderick Perkins
(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.
To get the full scoop, see Consumer Reports' Money report "Insuring your home: Make sure your coverage stands up in a worst-case scenario."
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