Aug 23, 2005 5:49 am US/Central
Many Homeowners Are Underinsured
Survey Shows Roughly 60% Of U.S. Homes Underinsured
by Jim Williams
(CBS)
What's your biggest investment? It's probably your home. But, most of us fall short when it comes to insurance. In fact, a new survey shows nearly 60% of American homes remain underinsured by an average of 22%!
A walk-through of a brand new home is supposed to be exciting, but for homeowners rebuilding after a disaster, it's all about what isn't there.
George Kehrer, executive director of Community Assisting Recovery, knows just how people who lose their homes feel. After losing his own home to a fire fifteen years ago, he learned his insurance didn't cover all he'd lost. Now he helps others nationwide. "Most homeowners don't know that; they just don't know what it's going to cost to replace their house," he said.
"We're into our own savings right now," one couple said about replacing their home.
In fact, about three out of five homeowners today have too little insurance, according to Robert Dowdell CEO of Marshall Swift/Boeckh, a company that tracks the issue. "The most typical pattern of underinsured homes are older homes because the cost of reconstructing an older home is just more expensive than a modern home," he said.
Dowdell says homeowners get hit when they haven't changed their policies for more than five years or they remodel without updating their insurance. "If they go to an agent, what they should do is to get a printout from the agent as to what elements were actually covered," he said.
Plus, the old-fashioned "square-foot" formula where you simply pay by the size of your house doesn't work for today's customized homes. Coverage also depends on what your personal treasures are really worth -- something George didn't know
"It really was a policy that just covered the essentials, but it didn't provide for the quality and quantity of things that we did lose," Kehrer said.
If you're not really sure what your home is worth, you can ask an agent to walk through your home or use some of the online insurance calculators available.
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