Guard against underinsuring your home against damage


Sixty-four percent of American homes are underinsured, according to a California company that tracks rebuilding costs.

Fire season is still in effect in Southern California, so disaster could strike at any time. But don't let disaster strike twice: If your home is damaged or destroyed, don't let being underinsured become the other disaster.

A freak windstorm toppled a huge tree onto a house recently, damaging the roof, siding and interior. The homeowner is worried how much his insurance will cover.

"There is so much damage done," said homeowner Michael Matra. "You have no clue really what the internal damage is."

Consumer Reports Money Adviser says that for peace of mind, it's crucial to review your policy.

"Damage by high winds may be subject to a steeper deductible than other types of damage," said Consumer Reports Money Adviser Senior Editor Tobie Stanger. "And your insurance may not cover earthquakes, or landslides, or floods at all."

Consumer Reports advises looking into federal flood-insurance programs, even if you live in a low-risk area.

"It's very important to make sure that you've covered the house for the full replacement value in case you have a total loss," said Stanger. "But don't use the sales price as a measure. These days that might not be enough to cover rebuilding."

For just a few dollars, on the website, you can figure out a realistic replacement estimate yourself. But be sure to include the cost of replacing any custom items like tiles, special flooring and fixtures.

"Choosing an insurance company requires research, not just to find the best price, but also to check out the financial health of the company," said Stanger.

To make sure the company is solvent and will be able to pay your claim, check the website and stick with companies rated "A" or "B."

For tree removal, Matra picked an established company, and he's happy he did as he has already received a check to begin the repair work.

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