Is Your Homeowners Insurance Policy Up-To-Date?

Residential coverage protects against damage or destruction of your house so in the event that your home is destroyed by a disaster such as a tornado or fire or any other loss that your policy covers, the insurance company will pay for repairs or completely replace your home.

It is vital to keep your homeowners insurance policy updated because the insurance company will only reimburse you for the insured amount of your home.

If your homeowners insurance was purchased over five years ago, the value of your home has probably increased since that time. However, without updating your policy to the current value of your home, the insurance company will pay only for the estimated loss as it was established when the policy was originally purchased. So if your home was insured for $300,000 and the value has risen to $500,000, the reimbursement amount paid by the insurance company would be short by $200,000.

Many homeowners that have to make a claim either do not have the proper homeowners insurance coverage or do not have enough coverage. Most good homeowners insurance policies today cover up to 120% of your dwelling coverage limit. But it is very important that you review the dwelling limit with your homeowners insurance agent at least every 2 years. Also remember that flood insurance coverage is never part of standard homeowners insurance policy. If you live in a flood prone area, you should seriously consider adding this coverage to your homeowners insurance policy.

You also have to take into consideration the replacement costs of your belongings throughout the home so you want to conduct a complete and accurate inventory in every room. One of the easiest methods to accomplish this is a video camera going room to room. But a digital or film camera will still suffice to jog your memory. It is much easier to document what you have than to try remembering everything when disaster strikes. It is best to store the video or photographic evidence off site. Use a relatives home or a bank safety deposit box. You may also want to invest in a small fire and water resistant safe to store these important documents.

Many people find that when disaster strikes, their homeowners insurance falls short. It's possible that you may qualify for assistance from the FEMA (Federal Emergency Management Agency). The SBA (Small Business Administration) also provide disaster-assistance loans. Those people who qualify can borrow up to $200,000 for rebuilding and $40,000 for personal property replacement at very low interest rates for up to 30 years.

Since each homeowners insurance policy is different, you need to know exactly what is covered and what is limited or excluded. Call your agent to see if your homeowners insurance policy is current because you want to be sure you will receive 100 percent of the replacement cost. Don't make the mistake of forgetting to look over your policy from year to year because doing so could cost you much more in the event of a disaster striking.