Like a Good Neighbor

Homeowners fretting about whether the housing market will ever rebound may be overlooking a more immediate and potentially devastating concern: does their homeowners' insurance policy offer enough coverage to replace the house should catastrophe strike?

"To determine whether you have enough homeowners insurance, you should do an annual review with your agent. they should be willing to do this, you can possibly even do it over the phone."

Too many of us pay our annual renewal for our homeowner's policy without thinking about what that policy is worth. Not only should you ask for an annual review, make sure your contents and major investments in your home are covered.

"Reviewing your insurance policy is important for any age house because what we've actually seen is the cost to re-build your house, which is what you're really insuring for, can go up even if you built your house a few months ago."

If you're going to invest a lot of money in your home this year, Angie Hicks says call your agent before the work begins and increase your coverage. This is just in case something terrible happens before the job is complete and you can't recover the costs because you were never insured for them. This was a hard lesson learned by thousands of Hurricane Katrina victims.

"When Hurricane Katrina hit, the price of lumber and a lot of building materials went up and so in fact houses that were built two, three months before the hurricane, would actually be more expensive to replace."

Most importantly, you should familiarize yourself with what you are entitled to receive in the event of a loss. Ask your agent about his or her experience in handling a loss claim. An experienced agent should be able to not only detail what your policy will and will not cover, but be able to give you a good idea of what to expect if a claim takes place. Angie's List says many people are concerned that they might have too much insurance on their homes right now. Fact is, many homes are actually underinsured.

Here are 11 tips you can use to make sure you're covered:

1. Get what you need: Replacement cost insurance covers the cost of replacing your home and is generally the policy for most homeowners. Your agent will evaluate your home and its contents and write a policy that would replace it at that value. Most agents will allow 20 to 25 percent more insurance than your replacement cost to cover things like debris disposal and other ancillary costs.

2. Annual review: When you get your renewal notice, ask your agent to come back out to review the home to see if you need to adjust your coverage. If you've remodeled or bought an expensive fixture, you will likely want to increase the value of your policy.

3. Don't forget the contents: The price of gold has dramatically increased lately; you may need to increase your coverage to ensure you could replace all of your jewelry.

4. Get specific. Find out what your policy says about storm, water, mold, wind and flood coverage. In the past 10 years, companies have increasingly changed the language about these specific items. Ask about adding specific endorsements if your agent or company doesn't offer the coverage you want.

5. Flood warning. If you live in a low-lying area or one that is predisposed to flooding, purchase flood insurance from the National Flood Insurance Program, which offers coverage up to $250,000. If you need more than that, shop around for a private company that offers supplemental flood insurance.

6. Language barrier. Learn the difference between equivalent and like/kind replacement. It's a very small difference in the language but it has huge implications. Like/kind replacement cost means that if you had a wood-shingled roof before the storm, you'll have a wood-shingled roof after the storm. Equivalent means that if you had a wood-shingled roof before the storm, you might not get one after.

7. Get loss of use coverage. Consider loss of use insurance to cover rent or hotel fees in the event your home is uninhabitable after a catastrophe. Experts recommend at least one year of coverage.

8. Claim deadline. Check with your state's Department of Insurance for the statute of limitations for filing a claim, which can vary from one to two years.

9. Safe keeping. Put important paperwork, especially policy information, in a fireproof/waterproof safe. Take photos and videos of everything in your home. Keep the originals in a safe-deposit box and send copies to relatives or friends across the country.

10.Ask around. Don't take an insurance adjuster's proof-of-loss statement as accurate. Instead, use at least three independent contractors' estimates as your starting point. The insurance company's initial payout is often drastically lower than what the work will require.

11.Public adjuster. If you experience a sizable loss, consider hiring a public insurance adjuster who will file and submit your claim on your behalf. These adjusters often have years of experience on the private insurance side and work to get homeowners the best settlement possible. Their compensation is a percentage of your settlement. That percentage varies by state.