Consumer Tips

Is Your Home Underinsured?

MetLife Your Life

September 22, 2017

Two out of three U.S. homes don’t have enough coverage in case of disaster. Find out if yours is one of them.

When was the last time you checked whether the insurance on your home was adequate? Nearly two out of every three of U.S. homes are undervalued, which can add up to serious financial trouble for homeowners. See whether any of these scenarios rings true for you.

Improvements Can Boost Home Value
Home improvement projects do more than increase your comfort and pleasure—they can spike the cost to rebuild your home.

Potential problems: When home improvements aren’t reported to the insurance company, your home may be left undervalued and underinsured. In the event of a disaster, such as a fire, there might not be enough money for the improvements to be covered.

How to fix it: Once a year, do a policy review with your MetLife Auto & Home insurance representative. He or she can calculate how much it would cost to rebuild your house, then make sure your insurance policy covers you for 100 percent of that estimated amount.

Higher Construction Costs Aren’t Factored In
Even if your home was properly insured when you purchased it from a builder, today’s higher costs of construction and changes in building codes could cause problems should you need to rebuild.

Potential problems: If you haven’t looked at your homeowners policy in a while, you might discover the limits haven’t kept pace with construction costs.

How to fix it: Ask for a total component rebuilding estimate that evaluates each aspect of your home’s construction. This includes examining the quality of materials — flooring, cabinets, vanities and countertops — rather than merely applying known rates of inflation to your former insurance limits.

Remember that costs to replace an existing house generally exceed the amount needed for new construction. If for no other reason, removing the debris and demolition of any undamaged portion adds to the costs. Plus, your community’s code requirements may have changed since your home was built. You may need Ordinance or Law Coverage to pay for upgrades that were not part of your damaged house.

Older Homes Have Unique Characteristics
Older homes, especially if they are historic, present unique insurance challenges.

Potential problems: Older homes often feature better craftsmanship and higher-quality materials than those used in contemporary homes. Details, such as high-grade wood floors or an elaborately detailed Victorian exterior, can be much more expensive to replace than modern vinyl tile and siding.

How to fix it: Discuss unusual architectural details with MetLife Auto & Home and make sure there is enough insurance to cover their replacement. Don’t forget your possessions when you update your homeowners policy. This convenient personal property inventory from MetLife Auto & Home can get you started.

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