Recent natural disasters are a reminder to review your homeowners insurance

Flood waters in an Indiana town with flooded homes Natural disasters like hurricanes Harvey and Irma are a harsh reminder to all homeowners to check and update their homeowners’ insurance. Consumer Reports recommends meeting with your insurance agent periodically to ensure that you’re properly covered. It’s important to keep in mind that the market value of your home is not comparable to construction costs. Market value includes the cost of land, and depends on factors such as your home’s location, the economy, and the price for which it could be sold. The cost of replacing your home with new construction could be significantly different.

Follow these 7 steps to get the most accurate replacement cost:

  1. Review your home’s vital statistics. Verify that the policy includes correct information about your home’s square footage, the number of bedrooms and bathrooms, its age and the structural materials with which it was built.
  1. Get a “new policy” quote. Ask your agent to recalculate your home’s reconstruction value using the most current construction cost data and updated property details. A new policy estimate will likely be more precise.
  1. Request a copy of the reconstruction valuation report. Make sure to get a copy of the report for your records. Review it for accuracy and make any necessary corrections.
  1. Repeat this process every few years. Rising construction costs can quickly make your policy limits outdated, so make certain your information is periodically updated.
  1. Buy the extended replacement cost endorsement. Extended replacement coverage will typically pay up to 25% above your limits. It is more expensive, but crucial if a natural disaster strikes and cost for construction labor and materials spikes.
  1. Protect against all risks. Homeowners could find themselves underinsured because standard policies don’t cover everything. You may need additional policies for flooding, earthquakes, hurricanes or wind and hail if you live in a high-risk zone.
  1. Consider adding a “floater” to your policy. If you own unusually valuable items such as jewelry or artwork, a “floater” could cover the full value of those items. If you live in an older home, consider adding an ordinance which will help pay the high cost of bringing key systems up to current codes when rebuilding.
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