Home Owners Insurance: Do you have enough?
Home Owners Insurance, I know boring, boring, boring. Yeah, talking about insurance is never sexy or interesting to anyone, probably not even insurance agents, but if you live in San Diego it can mean the difference between having a home or having a vacant lot.
During the 2000’s San Diego tried to burn itself down at least twice. Wildfires starting in the back country quickly became scenes of fire fighters working neighborhood to neighborhood trying to save as many homes a possible. We saw footage of news films showing home owners with garden hoses trying to hold back the incredible forces of Mother Nature. Once the fires were conquered the real heartbreak began.
The Red Cross was there to help with immediate needs, but what about home owners who had lost their homes or suffered damaged. They pulled out their insurance policies and began making phone calls. Many of the major insurance companies set up field offices near the fire areas to help home owners. All of this support was great and showed San Diego’s big heart but once the smoke had cleared reality set in. Many home owners were under insured and didn’t have the financial resources to make up the difference. Some home owners tried to sell their vacant lots at a drastically reduced price. Others simply walked away. More fortunate owners were able to rebuild and we have a mix of new and older homes in neighborhoods reflecting the regrowth.
But how do you make sure you are one of the rebuilders?
First have insurance. Some home owners had let their policies lapse and had no insurance at all.
Second make sure you have enough insurance to rebuild your house. Insurance really has nothing to do with how much your home is worth, rather it should be a reflection of how much it would cost to rebuild your home. In my area the average is $200-$250 per square foot to build a home. If you have a 2000 square foot home then you need $400,000-$500,000 of coverage to replace you home. If you have a lot of upgrades and pricey amenities then your replacement costs could rise to $400 or even $500 per square foot. If you have the $400,000 policy but it would cost $1,000,000 to replace your house, do you have the extra to rebuild the home. Trust me the insurance company doesn’t.
Third do a review of your home and pull out your policy and do a review of your coverages now. Talk with a builder to get some ball park figure for your home. Talk with your insurance company to find out how to increase your coverage if necessary. Few insurance companies have full replacement policies any longer so you had best make sure your Coverage A is enough to rebuild your home.
The courts have ruled that a home owner is responsible to make sure he/she has enough insurance coverage, not your agent, so take some time to make sure you are covered. If like me, your home is one of your biggest assets, take that extra time to protect yourself.
Do you have enough? I do now, what about you?