Do You Have Enough Homeowner’s Insurance Coverage

Whether you’ve just bought a new home or you recently made some home improvements, chances are you may not have enough homeowner’s insurance.  A staggering report says that 59% of American homeowners don’t have enough insurance to rebuild in case there were to lose that home.  With recent worldly disasters such as the earthquake in Haiti and Hurricane Katrina, it’s a reality that you could lose your home in a matter in minutes.  Do you have enough homeowners insurance?  Let’s find out.

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Do You Have Enough Homeowner's Insurance coverage

Why do so Many Not Have Enough Homeowners Insurance?

While the reasons that people don’t have enough homeowner’s insurance vary, the consensus from professionals do not: this is a major problem.

A surprising study done by Marshall & Swift, which tracks statistics for the real estate industry,

says 59% of U.S. homeowners don’t have the insurance to replace their home or the valuables inside after a fire, hurricane, earthquake or other disaster.

If that doesn’t want you to go out and double check your homeowner’s policy, I don’t know what will.

Reasons Why We Don’t Have Enough Insurance

Most people that buy coverage, buy based on the square footage of your home.  Why this method is a shortfall is that it doesn’t take into consideration what is inside in your home.  What about your computer, HD TV, poker table, 1970 baseball card collection, etc?  Even if you did take some of that into consideration, what new items have you purchased since you originally took our your homeowners policy?

Most insurance companies require you to insure your home at a minimum of 80% of its replacement value to be eligible for full coverage. If coverage falls below that level, you will usually get only a partial settlement, much less than you need to rebuild. If your house is a total loss and you have a mortgage and a home equity loan, you could be looking at bankruptcy.

Older Homes the Most Common Culprit

Generally, the cost of rebuilding an older home is greater than the cost of rebuilding a newer one – the repairs are more involved. Also, a lot of older homes were insured for about $100 per square foot, but in the last few years, it’s begun to take about $150 per square foot to rebuild – and as much as $250 per square foot for a hillside home or a luxury home. Construction costs have risen about 3% a year for the past decade, according to the National Association of Home Builders.

Measures to Make Sure You Have Enough Homeowners Insurance

The first step is to take out your policy and see how much home insurance coverage you have.  Have open communication with your insurance agent if there have been any significant improvements to your come.  To the best of your ability find out how much your home is worth and how much it would take to rebuild it. You can use sites like to give you a sense of what the approximate value of your home is.   It might be worth having a conversation with your insurance agent how much it would cost to fully insure it. In the event of a disaster, you’ll be financially and emotionally taken care of.

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