When it comes to home insurance and its value, how do you know if your home is underinsured and what can happen if it is?
It’s true, some individuals refuse to provide complete detail about the items in their home and their value to their insurance broker. What they don’t realize is that if they do not have the proper replacement value in place for their home - it’s underinsured.
The Co-Insurance Penalty
In your home insurance policy, there is a co-insurance clause that allows your insurance company to apply a penalty to the underinsured value. It’s important you understand the consequences of underinsuring your home’s value.
Ensuring your home is properly protected.
Now that you know what it means to be underinsured, below you can find the steps that should be taken to make sure your home is properly protected.
- Get a true valuation of your home.
- Provide your insurance broker with correct information.
- If there is something you are unsure of, don’t be afraid to ask your insurance broker.
- If you make any changes or updates to your home, provide your insurance broker with all the details, as every change (even something you think is small) can impact the value of your home.
You may need to do some research on the value of items you have in your home. However, the key to avoiding being underinsured is to be honest with your insurance broker about approximate value of your home.
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