Want to hear the truth about Real Estate prices? A majority of homes are undervalued by at least 25%. You heard me…25%. So why do I bring this up? Because, if a home is undervalued; more than likely, it’s under-insured. There have been countless instances of insured home-owners who suffered major losses only to discover the limit they chose for their homeowners insurance was grossly inadequate to fully compensate them. If you bought and have been paying for insurance, the last thing you need is an insurance company telling you that your coverage will only take care of part of the expense.
So why are so many homes undervalued and thus, underinsured? Experts say, inaccurate valuation methods, complacency with current home value and failure to report value-changing improvements and betterments are the cause.
The penalty for underinsurance is costly. The moral of the story is you should never carry a limit of insurance lower than 100 percent of your home’s current replacement value. Here’s why: Consider your house catches fire and the fire damage is so severe that your entire home must be torn down and rebuilt. If your policy limit is anything lower than $100,000 you will have to pay the difference yourself.
To make matters more difficult is the constant flux of property values. According to the National Association of Home Builders, the cost of common construction materials, have gone up over the past two years.
Be aware, that this can happen to anyone if you’re not working with an insurance professional that really understands the market and can provide strong coverage at a price that doesn’t make you want to throw him or her out the window.
Leading the industry through his innovative approach, Dino Katsiametis has over 17 years of extensive experience within mortgage, banking and real estate industries. His passion for the collective financial and investment services sector combined with his distinct insight, has catapulted Money Matters with Dino onto the forefront of financial news.
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