1. You did extensive remodeling or additions and forgot to inform your agent of likely increased replacement cost.
2. You insured only to cover the amount of the mortgage. Here in our area this would be unlikely as Florida carriers require the home be insured to full replacement value. Many will give a cushion accepting as low as 80% at the time of loss, but below that and you are in for a penalty on how much will be paid. So it is really important to insure sufficiently to totally rebuild.
3. You forgot about the fact your homeowner policy does NOT cover flood loss. A broken pipe is not a flood loss, but rising water from outside the home most certainly is, and would not be covered. A separate flood policy is available throught the National Flood Insurance Program and should be strongly considered.
4. You have an older home and didn’t increase the Ordinance or Law coverage. If your older home is destroyed it will be required to meet the newer, more strict building codes. The extra expense of doing so is covered by Ordinance or Law. Most policies have a limited amount of coverage included, typically 10% of the building value. In Florida carriers must offer 25% or even 50%. Depending on the age of your home it is often wise to increase this coverage.
5. Not keeping up with increased building costs. For a few years here in Florida building costs were pretty flat as construction came to a stand still. Now however these costs are back on the increase as building has heated back up. Most policies will offer an inflation guard option where the covered value is automatically increased at each renewal by a pre-selected percentage.
