How do we know what the right amount of insurance is for our property. Do we just use the minimum amount the bank has requested?
Graham Doessel - CEO - MyCRA (Specialist Credit Repair) Lawyers (LPH)
Current Rating: 4.65 / 5
I am glad you have asked this question, as it's very important that you get it right...
You WILL need to speak to an insurance professional to get specific information about your specific circumstances as, if you don't get this right, and you're uninsured, you could lose even more tht you'd expect...
For example, and I may not have this exactly right, but it goes something like this...
If your home is valued at $100,000.00; and
You under insure it at $80,000.00;
(You'd think) you'll get paid $80,000.00; BUT
Your insurance company may match your underinsurance percentge
since you're under insuring by $20,000.00
Your insurance company my deduct AN ADDITIONAL $20,000.00; meaning
instead of being paid out $80,000.00;
you may only be paid out $60,000.00; as follows
Property value $100,000.00 (you insured for $80,000.00)
Less your under insurance of $20,000.00
Less Insurance Co's deduction $20,000.00 (yep, they deduct TWICE the actual under insurance amount)
Your actual payout $60,000 ($40,000 less than you need)
So, the BIG takeaway here is, GO And Get Specific Insurance Advice To Protect Yourself ASAP...