Under-Insured Home: What Can I Expect?
Updated: Dec 6, 2021
You have saved for a long time and even borrowed some money so that you can buy your home. Having a house of your own is an investment that you decided to take on because you know that it is something that you can keep for good. However, home ownership is not just about making the purchase. It comes with responsibilities to ensure that you will be able to protect it from various damages that may be caused by any number of things. This is why you have to buy homeowner’s insurance.
However, many homeowners to think that they can get away without home insurance. They don’t think something seriously terrible will ever happen to them or their home. In truth, some have even invested in high-end security system so that they could keep the burglars away. And then they depend on luck to keep them and their valuables safe from fire or any acts of nature. But how long can that luck hold? And then there are those who buy home insurance, the cheapest they could find. But what’s the risk of under insuring your home?
Simply put, if you buy insurance that would not cover everything that you consider valuable in their home, you are putting your investment at greater risk. If you are underinsured, and your home suffers damages, and you decide to make a claim, the amount of money you will get from the insurance company will not be enough to cover the costs to repair your home or rebuild it if needed. This just means that you will not have enough money to cover the loss.
If you are dealing with structural damage to the house, under insurance will become a much bigger problem. Although it is not always the entire house that gets damaged, the repair of particular parts of the house can still be costly. If the intense rain and wind blew away a part of the roof, under insurance will only mean thousands on your part. That amount would have been covered by insurance if you bought just the right amount of coverage for your home.
The value of your house is pulled down when you underestimate the amount of money it will cost to rebuild your home from scratch. You may have bought your house for a minimum amount today, but you should consider its value in ten or twenty years after. Its value may have doubled or tripled by then. However, when ensuring your home, you shouldn’t think about how much you bought it for. Rather, you should reflect on how much it would cost if you had to rebuild your house today.
An under insured home only spells out more problem for the homeowner than comfort and security. If you are not sure how much home insurance coverage you should get, talk to an insurance advisor. They can help you figure it out.