Keep Your Family Safe and Avoid Underinsuring Your Home

Insuring your home is one of the most important ways you can protect your family from financial hardship. Should your home be damaged or lost in a catastrophe like a fire or flood, you need your insurance policy to cover the costs of repairing, rebuilding, or replacing everything. But do you have enough insurance coverage to do the job?

There are millions of underinsured homes across North America, and many homeowners don't even realize it. At a time when wildfires are spreading rampantly and flooding becomes increasingly common, homeowners need to re-evaluate their insurance policies and make sure that they're not underinsured. If your home is damaged and you're not prepared, it can be a very expensive oversight.

How to File an Insurance Claim?

If your home or your belongings have already been damaged, you'll have to make do with the insurance policy you have. If you're concerned that you may not have enough coverage, or your insurer has not made a satisfactory offer, you may want someone to help you negotiate with the insurer. Virani Law is an independent insurance adjuster that specializes in helping homeowners with their claims. They represent the homeowner's interests and will:

• Explain the details of your insurance policy;

• Independently assess the extent of the loss; and

• Negotiate with the insurer and challenge assessments that are too low.

What Does Underinsurance Mean?

When you're underinsured, you do not have enough coverage to fully compensate you if your home and its contents are damaged or lost. The result is that you will have to make up the difference in cost for repairs, replacing your belongings, and the cost of finding an alternative place to live while repairs are completed. For example, if the cost to rebuild your home is $250,000, but your coverage limit is only $200,000, you'll have to find $50,000 out of pocket to complete the repairs.

On the one hand, you may not want to pay increased premiums for better coverage, but the costs of being caught underinsured can be devastating.

What to Look for in Your Policy

There are a few key areas to look at when you re-evaluate your insurance policy.

Construction Costs: Find out what construction costs are like in your area. Remember that your home insurance policy doesn't cover the value of the property, but rather the cost of material and labor to rebuild it. In the event of a wildfire or flood that affects multiple properties, construction costs will be higher as demand surges in the aftermath.

Personal Contents: Another area where you can wind up short is Contents insurance. There are several ways you can be underinsured when it comes to replacing your belongings. First, check your coverage limits and compare it with an inventory of your valuable belongings. Second, see if you have Actual Cash Value coverage, as this will only pay out the depreciated value of your belongings, not enough to replace them entirely. Consider a replacement cost endorsement if one is available. 

Liability: Finally, don't neglect the liability portion of your policy. If someone were to get hurt on your property, you can depend on your policy to cover damages and legal fees.

Now's the time to check your insurance policy and make sure it protects your home and family.