Orlando Homeowner’s Attorney
Perhaps the most common problem that homeowners encounter when their home has been destroyed by some kind of catastrophe is that it is underinsured — meaning that the policy limits are too low to allow them to rebuild their house.
Underinsurance happens because insurance companies have little incentive to set policy limits accurately. If they do, their policies seem more expensive because they have to charge a higher premium. By setting the policy limits low, the insurance company is able to be more competitive in the marketplace by charging a lower premium, and it also caps its exposure by essentially shifting to its own policyholder a substantial part of the risk that is being insured.
For example, if the true cost to rebuild a house is $1 million, and the insurer sets the policy limits at $500,000, half the cost of a potential loss is borne by the policyholder!
Few central Florida policyholders set out to underinsure their homes, but even fewer have the information available to know with any accuracy how much it would cost to rebuild in their area. Insurance companies, by contrast, are in the business of paying claims and rebuilding homes. As a result, they have access to accurate construction-industry data that should allow them to accurately gauge what the true replacement cost of a house will be.
