Make sure you aren’t underinsured
Homeownership is part of the American Dream, and for many people a home is their largest single purchase and most valued asset. Unfortunately, many homeowners don’t realize that their possessions and homes would be in jeopardy if they were inadequately insured and lost due to fire, flood or another disaster. So it’s important that you ask yourself one simple question: Do I have enough insurance to repair or replace my home if it is damaged or destroyed?
Most homeowners would say yes, but recent studies indicate that many homeowners lack sufficient insurance to rebuild after a disaster. In fact, according to Marshall & Swift/Boeckh, which provides building-cost information to insurers and government agencies, 61 percent of all homes are underinsured by an average of 18 percent.
As one of the nation’s leading insurance providers, Mercury conducts an annual review of its customers’ homeowners coverage limits based upon estimated replacement costs in their neighborhoods, and as a result of these calculations may adjust the policy limit. These estimates are tied to general factors in each area and are supplied by appraisal agencies.
This is only part of the process, however, as we recommend that you also get an insurance checkup from your agent once a year to help you make an informed decision about the coverage you need. No one wants to pay a higher premium, but construction costs have increased dramatically over the past several years and it’s important for you to make sure that any potential loss has satisfactory coverage.
This is especially important if you have made improvements to your home and have not incorporated these improvements into your coverage. And even if you haven’t made any improvements to your home, we still recommend a review to make sure that your coverage limits are adequate to cover the cost of rebuilding in your area, because every neighborhood can be a little different.
The National Association of Homebuilders annually tracks building costs, and the average price per square foot for residential construction in the Western states jumped 36 percent between 2002 and 2007.
So take a moment to reassess your coverage and protect your family’s future. To help you get started, here are a few things you should consider and discuss with your agent:
You ultimately know your home better than anyone else, so you will need to decide what’s right for you. Your Mercury agent will be happy to assist you in evaluating your current policy limits and coverages to help you make sure that you have the right coverage.