I thought I was fully protected until a flash flood revealed that my home insurance only covered half of the actual damage. This post is a cautionary tale and a guide to understanding underinsurance and how to avoid it.
Subtopics & Answers:
What is underinsurance and why does it happen? It occurs when your coverage limit is lower than the actual cost to replace or repair your property.
How to assess your true coverage needs Use replacement cost calculators and consult with a licensed agent.
Market value vs. replacement cost: what’s the difference? Market value includes land and location; replacement cost focuses on rebuilding.
How to audit your policy annually Review your assets, inflation rates, and any home improvements.
Real-life consequences of being underinsured I share how I had to pay RM40,000 out-of-pocket due to a coverage gap.
Steps I took to fix my policy I upgraded my plan, added riders, and now do yearly reviews.
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