Homeowners insurance: Time for a tune-up?
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In ‘Underinsured wildfire victims feel burned again,’ The Times’ David Lazarus looks at the issue of homeowner underinsurance and whether it is overblown.
According to the California Department of Insurance, nearly 39,000 claims were filed after the wildfires that swept across Southern California last October and November. Just over 30,000 of those claims had been settled as of June 20, leaving almost 9,000 unpaid or disputed. It’s not clear how many of those claims involve underinsurance. As of this week, the Department of Insurance had received 90 complaints from policyholders who said their insurance did not adequately cover their losses from last fall’s fires. But officials say many underinsurance cases may not result in complaints to regulators. ‘It’s not the vast majority of claims, but it’s not insignificant,’ said state Insurance Commissioner Steve Poizner.
Among the reasons given for underinsurance: consumers trying to keep costs down by not reporting improvements, and insurers trying to offer competitive quotes.
Whether underinsurance is a widespread problem or an overblown concern, now could be a good time for those spared in the recent fires to see whether their policies cover at least $200 per square foot -- considered the low end of most homes’ replacement cost -- and contact their agents.
CNNMoney.com has a short video, ‘Knowing your risk level,’ with tips to help homeowners figure out appropriate replacement costs, including talking to a builder. There are also online building cost calculators and other tools available free of charge. That $200 per square foot may not cut it depending on the quality of the home. Is this really an area where you want to cheap out?
--Lauren Beale
Thoughts? Comments?
