About two-thirds of American homes are underinsured. CBS News reports that a study by Marshall & Swift/Boeckh found that homeowners only have sufficient home insurance to pay for about 78% of the amount needed to rebuild a home that is destroyed.
Areavibes says that the median value of a home in Flowood, MS is $174,500. This means for the average homeowner who lives in Flowood with an underinsured home. If it needs to be rebuilt, there will be the bills to pay of 22% of $174,500, which equals $38,390. Yikes! That is a lot of money to spend in the event of an emergency after a home is destroyed.
Private Mortgage Insurance
One contributing factor that may be partially responsible for this severe underinsurance problem is that homeowners may not clearly understand private mortgage insurance (PMI). PMI is required by some lenders to get a loan. Some may confuse PMI with full home insurance. However, PMI protects the lender, not the homeowner.
If a home with PMI insurance is destroyed, the PMI pays off the balance remaining on the loan. It does not pay anything at all to the homeowner. The balance of the home loan is usually less than the home is worth or the cost of replacing the home. PMI will not help rebuild the home. Moreover, PMI does not cover the down payment or any increased value of the house.
Avoid the Danger of Being Underinsured
Clever homeowners work with their agent at Insurance Protection Specialists, serving Flowood, MS and the surrounding area, to make sure they have adequate home insurance protection in case something terrible happens. Talk with your agent about replacement cost coverage that considers the actual total cost of rebuilding a home. Ask about flood insurance too because that is a separate policy
Contact your agent at Insurance Protection Specialists in Flowood, MS by calling our office to get a home insurance review and a quote for home insurance to be certain that you have adequate insurance protection.