Two situations have left many homeowners insured for less than their homes are currently worth.

Many homes today are priced at higher levels than they were just a few years ago. In addition, homeowners have poured a great deal of money into their homes for everything from backyard decks to new kitchens and bathrooms.

In 2005, an estimated $155 billion, up 27 percent from the previous year, was spent on home improvements in the U.S. With the cost of lumber, building supplies, and labor increasing by about 7 percent last year, the value of improvements in 2006 would be even higher.

People who haven't updated their insurance policies could be in for a nasty surprise if they have to make a claim. A survey by Marshall & Swift/Boeckh, a firm that supplies building-cost data to insurers, shows that 60 percent of homes are undervalued for insurance purposes. The average homeowner could rebuild about 80 percent of his or her home.

Robert Dowdell, CEO of Marshall Swift/Boeckh, says: "The most typical type of underinsured homes are older homes because the cost of reconstructing an older home is just more expensive than a modern home."

Dowdell contends that most homeowners get hit when they haven't changed their policies for more than five years or they remodel without updating their insurance. Plus, the old-fashioned "square foot" formula, where you simply pay by the size of your house, doesn't work for today's customized homes. The amount of coverage you need also depends on what your personal property is worth.

Call me today to arrange for a Replacement Cost Appraisal of your property. As a state certified residential appraiser, I am trained and experienced in these type of appraisal assignments, and I'll give you peace of mind knowing that if you suffer property damage or loss, you'll have the right amount of insurance.