If your home burned down tomorrow, chances are good you wouldn’t get enough money from your insurance company to replace it.

About 64% of homes nationwide are under-insured, according to a survey by Marshall & Swift / Boeckh. This Princeton, N.J., company specializes in estimating construction costs, and its annual reviews of 3 million insurance policies consistently show homeowners don’t have enough coverage.

The latest survey showed the typical homeowner was underinsured by 27%, which shows most homeowners are at risk.

Several factors are at work:

· Insurance policies cover less than in the past. In the past five years, the vast majority of insurers have modified, their guaranteed replacement policies. Today most insurers cap how much they pay to 120% of your policy’s stated coverage amount.

· Construction costs are on the rise. The cost of rebuilding a home has risen about 3% a year on average for the past decade, said Gopal Ahluwalia, economist for the National Association of Home Builders. Many homeowners haven’t updated their coverage to reflect those costs. “Often, the last time people think about their homeowners’ insurance is when they get a mortgage,” said Loretta Worters, spokeswoman for the Insurance Information Institute, a trade group.

· Homeowners are remodeling more. Americans spent $180 billion in 2003 updating their homes, often boosting the value of their homes in the process. An estimated 75% of remodelers fail to update their insurance coverage to reflect those improvements, said Bob Crine, president of Marshall & Swift, the construction estimating company.

Crine’s 70-year-old company uses a huge insurer-supplied database that compares existing coverage with construction costs in different areas all over the country. In addition, some homeowners are asked to complete surveys detailing all the features of their home, while others houses are inspected personally by Marshall & Swift employees.

The company has found that homeowners consistently shortchange themselves when it comes to getting enough coverage, Crine said. Homeowners have more at stake now, however, because so many insurers have capped their replacement coverage. Estimates need to be based on reconstruction costs (instead of new construction costs) which take into account additional expenses for debris removal, specialized workers and the lack of any bulk discounts, Crine said.

The best insurers, Crine said, ask their customers numerous, detailed questions about the features of their homes to determine how much coverage they should have. Others rely on less effective methods, such as multiplying the home’s square footage by average construction costs in the area.

The problem with using average construction costs, said Ahluwalia of the builders’ association, is that your home could cost much more to rebuild.

“A basic home with regular carpet, two bathrooms and no fireplace is going to cost a lot less (to rebuild) than a home with two fireplaces, a three-car garage and hardwood floors,” Ahluwalia said. “And the trend has been to update and improve everything, not only in new houses but in existing stock.”

Are you covered?
So how can you tell if you have enough coverage? Take the following steps:

· Read your policy. Insurers have generally made their policies more understandable in recent years. You should be able to get a good idea of what’s covered and what’s not. If you have any questions, call your insurer and ask.

· Insure the house, not the land -- or the mortgage. The price you paid for your home, the amount it’s worth now and the mortgage you’re carrying are all pretty much irrelevant when it comes to determining how much insurance you should have. What you really need to know is how much it will cost to rebuild your house, and that could be significantly more or less than any of the above figures. Nationally, about 24% of the average home price is the value of the land, Ahluwalia said, although that percentage can spike to over 50% in expensive markets such as Orange County, Calif., New York or San Francisco.

· Talk to builders in your area. If your insurer can’t help you nail down the cost of rebuilding your home, your best bet may be to chat with contractors doing work in your neighborhood. Their ballpark estimates are likely to be helpful and accurate as opposed to a guesstimate from a company or agent who isn’t as familiar with the quality and cost of homes in your area. If you’re still having trouble coming up with a solid estimate, consider hiring an appraiser to do the job. This can cost you $300 to $500, but in the long run could save you a world of grief.

Consider upgrading your coverage. The older your home, the more it will cost to bring it up to current codes -- and those costs typically aren’t covered in the standard replacement policy being sold to most homeowners. Upgrading your coverage is a relatively inexpensive addition to your policy that could pay off should you ever face disaster. And the possibility of disaster is, after all, why you have insurance in the first place. Make sure you have enough so that the tragedy of a fire or other disaster isn’t compounded by not having enough money to rebuild.