Is your home underinsured if disaster strikes?

If you’ve been in a house for five years or longer, chances are you may be grossly underinsured for homeowners coverage. But discovering that fact after a catastrophic loss is not a good way to find out!

RELATED: Best and worst home insurance companies

Don’t let catastrophic damage to your home ruin you financially

Over the years, insurance companies have made home insurance policies less and less generous as they pile on exclusions and reduce what they’ll cover.

Common exclusions can include everything from mold to sewer backup to expensive jewelry that requires an additional rider on your policy.

But here’s another exclusion you may not be aware of…

Reality check: Flooding is not covered

Flood insurance does not come standard with your basic insurance policy. You need to buy coverage through FloodSmart.gov, which provides up to $250,000 for rebuilding and $100,000 for the contents of your home.

Flood insurance is required for all federally backed home mortgages, but it’s a wise idea to buy a policy even if you’re not within a high-risk flood zone.

The average cost of a policy is between $650 and $750 annually. However, residents of low-lying coastal areas will pay more based on the level of risk they pose to the insurance program.

But this is one policy you don’t want to sleep on. There’s typically a 30-day waiting period from the time you buy it until policy is in full effect in most cases.

Why you need to update your amount of homeowners coverage every few years

Do you read the coverage limits when your home insurance policy comes up for renewal each year? It’s the only way to know if you could rebuild your house for the coverage limit.

Meanwhile, have you put substantial upgrades into your home or has your home enjoyed a sizeable increase in value due to housing market trends? Then your policy’s payout may not fully cover your costs to rebuild and replace your belongings after a catastrophic event like a fire that burns down your home.

Occasionally, you’ll find your insurer may not want to raise your coverage. Money expert Clark Howard himself ran into this problem a few years back.

“My insurer would not raise my limits on my primary residence, so I triggered a clause in my contract and got a third-party appraiser to look at my home,” Clark recalls. “The appraiser said my home had appreciated in value beyond my coverage. Only then did the insurer accept the appraisal and comply by raising my coverage — and I was happy to pay even though extra coverage in turn raised my premiums.”

Finally, be sure you're insuring your home for the replacement value, not market value. That's because if you suffer a catastrophic loss, the cost to rebuild would be far higher than what you could sell your home for right now.

Document your belongings with your phone and store it in the cloud 

If you have a legitimate loss like a catastrophic house fire, the insurance adjuster may assume you’re trying to pull something over on them if you just come up with a list of expensive belongings off the top of your head that got destroyed in the fire.

Creating an inventory helps you prove that you’ve actually lost what you say you’ve lost. The easiest way to accomplish this is to walk around your home while you shoot a video on your phone and narrate it.

In your video, you should try to name the belongings in your home, what you paid for them and when you purchased them, if you remember. It’s good to do this annually as new items come in and out of your life.

Then be sure to store it in the cloud, not just locally on your phone. By doing this, you can be sure it’s accessible even if your phone is destroyed. After all, that video won’t do you any good if your phone melts in your home during a fire!

More insurance stories on Clark.com

• How to shop for term life insurance
• Best and worst auto insurance companies
• Best and worst home insurance companies

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