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Protecting your property

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Posted at 3:17 PM, Aug 27, 2019
and last updated 2019-08-27 15:17:15-04

Before hurricane warnings, find out what storm damages your home insurance covers and whether you need to add more protection. If a hurricane destroyed your home, would your insurance cover the cost to rebuild?

Don’t wait until a storm is threatening offshore to find out.

If you’re like most people, you probably don’t have more than a vague idea about what your policy covers and what it doesn’t. The danger is that you may think you’re adequately protected when you are not. By some estimates, close to two-thirds of U.S. homes are underinsured.

How does it happen? Sometimes people make home improvements without telling their insurance agents. Or, policy limits simply haven’t kept up with rapidly escalating building costs. Sometimes policies have special exclusions or restrictions that homeowners don’t realize are there.

Florida law now mandates that insurance companies include an easy to understand coverage checklist with every homeowner’s insurance policy. Among other things, the list will show costs, coverage limits and exclusions. It will also detail how much the policyholder would receive [and for how long] if the home were destroyed.

Your overall insurance limit is the first thing to check since that could come into play with a destructive storm. Ideally, you want a limit high enough to cover the cost of rebuilding your house on the same site, not including the value of the land. If you have a mortgage on your home, your lender may require you to carry enough insurance to replace your home, but cannot require more than that even if your mortgage is for a higher amount.

If your limit looks too low, ask your insurance agent to evaluate your situation. The market value of your home might be twice the limit, but that doesn’t necessarily mean the limit is wrong. Property values are changing rapidly and it can be very difficult to separate the replacement cost of the building from the cost of the land.

If you disagree with the agent’s estimation of replacement value, you can get a second opinion. There are valuation sites such as www.accucoverage.com or www.bluebook.net, where (for a nominal fee) you can obtain an online report. If you have an expensive home, with many custom features, it may be worthwhile to pay for a professional appraisal.