Insurance — Homeowners Insurance in Winter Park, FL

Are you one of the many homeowners that are underinsured? Many people end up underinsured because they don't want to pay too much for their insurance policies, but that can leave them in a bad situation if something does happen to their home. In this blog, we discuss some of the things you need to consider if you want to avoid being underinsured.

When Was the Last Time You Had Your Home Appraised?

Your home's value goes up over time, and it may have gone up more than you think, especially if you're living in a particularly desirable area.

Your insurance will be based on the replacement value of your home, which generally means the raw materials and labor that would be required to build your home again. However, if the economy has improved in your local area or if real estate has become more expensive, then your costs will have risen.

You need a solid estimate regarding how much it would actually cost to replace your home. Your insurance rate may not have anything to do with your home's current value, which means you could actually be underinsured or even overinsured, and the only way to tell is to contact an insurance adjuster.

Have You Made Any Major Home Improvements?

Home improvements don't just improve your property values, they also increase the home’s replacement cost. For instance, if you've put in granite counter tops in your kitchen, this is another expense associated with rebuilding your home in the event that it does have to be rebuilt.

If you add an addition to your home, such as a fence or porch, then you have more property that you need to insure. In addition, if you don't update your insurance, you could end up having to pay for these additions again, out of pocket.

Is Every Item In Your Home Insured?

Over time, everyone starts to accumulate additional items. You may have more items than you did when you first got your insurance policy. Your insurance policy might cover $20,000 worth of personal possessions, but you could actually have $30,000 worth of personal items. If the replacement value of your items exceeds the coverage you have, then you'll need to pay to replace these items on your own.

Creating a regular inventory of the items in your home is an important part of maintaining your insurance policy. Also, remember that you need to track the replacement value of your items, not the new value of your items; items will depreciate in value over time. Therefore, if you haven't accumulated more personal property, then you could actually be able to lower the amount of coverage that you have. 

Are Your Most Expensive Items Insured?

Most policies have both a cumulative amount covered for all your possessions and a cap on each individual item. Though you could have a $20,000 personal property policy, for example you could be capped at $1,000 per certain types of items. Therefore, if you have a damaged item that was worth $8,000, you will only be able to get the first $1,000 covered. You should check your policy to make sure your most expensive items are covered.

What Disasters Aren't Insured?

Another way you could be underinsured has to do with disaster situations, you may assume your insurance covers natural disasters, but it may not. For example, in many areas flooding damage and earthquake damage are not covered by a default policy.

While you can purchase this type of insurance, it's going to be an option that costs more. You need to carefully read your policy to know what type of disaster situations are covered.

Estimates show that over 50 percent of homeowners could be underinsured. Are you one of them? If you aren't sure, you should contact one of our experts at State Fund Insurance immediately.