Is your home really insured?

September 30, 2011 3:27:01 PM PDT
It's been a bad year for homeowners, with hurricanes and wildfires. If disaster strikes and destroys your home, there could be another disaster lurking - your insurance company may not pay enough to rebuild.

Chances are most of the people watching could face problems rebuilding. Sixty-four percent of American homes are underinsured, according to a California company that tracks rebuilding costs. Consumer Reports has important advice to help guard against the unpredictable.

A freak windstorm toppled a huge tree onto one house recently, damaging the roof, siding and interior. The homeowner, Michael Matra, is not sure how much his insurance is going to cover.

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

Consumer Reports Money Adviser says for peace of mind it's crucial to review your policy before disaster hits.

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

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. But don't use the sales price as a measure. These days that might not be enough to cover rebuilding," Stanger said.

For just a few dollars on the website AccuCoverage, 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," Stanger said.

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

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

Consumer Reports says while you're sizing up the best coverage, also keep in mind that rates can vary widely.

The one thing you can do right now is go through your home with a video camera, tape every room in your home, and then put that tape somewhere away from your home. When we spoke with fire victims, most of them said they only had time to get out and certainly no time to make a record of things that were lost.

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