Insuring your home

NEW YORK (CNNMoney.com) -- The deadly tornados in the South are a stark reminder of how important it is that we have enough insurance on our homes. Here are some top tips on making sure our homes are covered.

1: Get an Estimate

First of all, you want to insure your home for the total amount that it would cost to rebuild it in the event it is completely destroyed. This does not mean market value. About 58% of homes are underinsured according to a study released by Wisconsin construction-data firm MSB.

Of course you'll get an estimate from your insurance agent. But be wary that the estimate may not be accurate.

In the end, the responsibility for determining the value of your home is your job. You can do a back-of-the envelope calculation by multiplying local building costs per square foot by the total square footage of your home. But that may not account for other features of your home that could affect its value, like a finished basement, an attached garage or special heating or cooling systems.

Go online to accucoverage.com. For a few dollars, this Web site will let you get an estimated replacement cost of your home with information you plug in. Or, you can hire an appraiser says Bob Wilson of the Independent Insurance Agents and Brokers of America. That may cost you up to $700. To find an appraiser go to appraisers.org.

2: Get an inflation guard

When you rebuild a home, you have to figure in the average cost of materials that are used in building construction. Labor costs and inflation must also be figured in. Don't forget that reconstruction of an existing home is more expensive than a new home. There's debris removal, and of course retrofitting a home to a foundation is more expensive than starting from scratch.

To insulate yourself against these increases see if your insurance company offers an inflation guard clause. This is a way of automatically increasing your policy limits to reflect construction costs in your area.

3: Get the Right Policy

You don't want an actual-cash-value policy. That's because it will reduce your payout by how much your possessions have depreciated.

A guaranteed replacement-cost policy - this policy reimburses you for the full cost of the rebuilding - it's the gold standard. But it's almost impossible to find.

Go for an extended replacement-cost policy. This pays you a set amount - called the dwelling limit - plus a 20-25% margin. You can also add building-code endorsements to cover the cost of complying with future rule changes.