I live in earthquake territory and invest in hurricane as well as wildfire lands. I am always trying to cut costs but realize that one area of my budgeting cannot be altered. Insurance. Last year’s wildfires caused a wake up call for many of us. Do we have the limits on our homeowner’s insurance to re-build our home should some “act of God” or other catastrophe occur? According to the Bureau of Labor Statistics and the Associated General Contractors of America, 58% of us have too little coverage to be able to fully rebuild our home should disaster strike. With hurricane season starting just a couple of weeks from now, do yourself a favor and:

1. Look over your existing insurance policy. Make sure you have an extended replacement cost provision which pays you the set amount (dwelling limit) plus at least a 20% margin. Construction costs have rose dramatically over the last few years. Add this margin to cover any inflationary costs.

2. If you live in an area of the country which could have a natural disaster (hurricane, wildfires, etc.), try to get them covered or get an additional policy. I have earthquake insurance for California and hurricane insurance on my rentals in Florida. If you don’t have those in your policy, there is a good chance they won’t be covered should disaster strike.

3. Know what it would cost per square foot to rebuild and factor that number into your insurance limits. The national average is $250 a square foot, however if you live in California the cost could exceed $400 per square foot, a big difference.

4. Document what you own. If you expect to be reimbursed you need records: pictures of your personal belongings, serial numbers, and anything else of importance.

This entry was posted on Friday, June 27th, 2008 at 5:00 am and is filed under General Interests. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.