Is your homeowners insurance adequate?

The main reason people purchase homeowners insurance is to protect their family residence in case of a disaster, yet research has shown that a large portion of homeowners in the U.S. don't have the proper amount of coverage to rebuild if their home was destroyed. Some causes for this are increased property values, improvements not reported to their agent, increased cost of construction and in-home businesses.

Many people think they have sufficient coverage if their home is insured for it's market value or the cost to construct it new, but it can cost much more to rebuild a home than new home construction. For that reason, it's important that your homeowners replacement cost listed in your policy be adequate to cover the costs of rebuilding your home in case of a loss.

Some things to consider when deciding if your home's insurance replacement value is adequate to rebuild your home are:

• make sure you've notified your agent of any additions or remodeling projects you've done
• make sure a replacement cost calculation has been done by your agent
• know what building costs are in your area for a new home, comparable in size and quality to your present home
• make sure your coverage provides protection for any upgraded home features you have such as hardwood floors, plaster walls, high-end woodwork or tile that would be expensive to replace
• be aware of any significant building code changes in your area since your home was built

Next week, we'll cover why it can be more expensive to rebuild a home compared to the cost of new construction.