It's no secret that property insurance can help you if your home is destroyed by a fire, hurricane, tornado or other natural disaster. But what if you discover your policy will only cover a fraction of the cost of rebuilding your home? According to Bloomberg reporter Darrell Preston, this happens more often than many people think. Jean talks with Darrell about his article in the September 2007 issue of Bloomberg Markets magazine, which exposes what he says are secret tactics insurance agencies use to cheat consumers out of claims after a disaster.

Darrell says that insurance agents or companies often advise consumers on how much insurance they need, and in many cases, people don't buy enough coverage. "This happens because often [insurance agents] insure for the amount of the loan or the amount that it is appraised for at the county real estate office, and then the actual cost to rebuild is much higher," he says.

How can you be sure that this doesn't happen to you? Darrell offers some tips:

• Do your homework. Darrell says you should contact your state insurance regulators or the National Association of Insurance Commissioners and get information on the insurance company you are considering. Ask if there are any complaints against the company. "You can at least get a sense of what your insurance company's reputation is in your state for handling claims," Darrell says.
• Get a second opinion. Before you agree to an insurance agent's suggested policy, have a home builder or contractor give you an estimate on what it would cost to rebuild your house after a disaster. "You may have to overrule the recommendation of your insurance company," he says.
• Inform your insurance company of any remodeling/improvements. "They can't insure it if they don't know about it, and they will not cover that if it is damaged," Darrell says.
• Keep an inventory of your home's contents. Make sure to detail all of the contents' values, Darrell says. "We found that insurance companies, in some cases, when looking at replacement costs for contents, will shop on the Internet for the lowest cost item and in some cases that is all they will pay," he says.