Did you know that 59% of homes are under insured? Unfortunately one of the most valuable tools to protect your home is often times the most neglected. Your home insurance policy. Enclosed is a great article written by Valeria Weber.

According to Marshall & Swift/Boeckh, a leading provider of building replacement cost data, nearly two out of every three American homes, or 59 percent, are underinsured. The definition of underinsured is that homeowners, on average, have only enough insurance to pay for 78 percent of costs to replace or rebuild their homes.

One of the reasons this startling statistic has arisen is that many homeowners do not update or periodically increase the coverage on their homes. When homeowners remodel and improve their homes, they often fail to follow through with a call to their insurance agent to update their coverage.

Another contributor is the surging price of building materials, energy and labor, all which have increased replacement costs up by over 7 percent a year since 2001. If you’ve been in that home for five years, your homeowners’ insurance has been reduced to two-thirds coverage of the home by those increases alone.

Consumer advocates say that part of the problem lies in the way that homeowners insurance is sold. In the competitive marketplace, the last thing an agent wants is for the customer to run down the street to a competitor because they got a quote for $50 a year less.

They say many agents provide quick quotes to close a sale, lack the training to properly asses the value of the homes they insure and often rely on over-the-phone interviews to estimate the amount of coverage for a customer’s home. The result is that homeowners buy cheaply priced coverage that they mistakenly believe will replace their home in the event of a full loss.

That is not entirely fair to the insurance industry. Many homeowners have made home improvements and neglected to inform their insurance broker. The increase in labor and material costs has come into harsh focus during the rebuilding efforts following Katrina and Rita. Homeowners who are rebuilding after storm damage of that magnitude also find themselves facing new building code clauses that didn’t exist when the home first went up.

We invite you to contact our office for a no obligation review of your current home coverage. RMS has the tools to properly assess the replacement value of your home. That way in the event of loss you’re policy will work for you.