Don't wait until a major hurricane is nearing Hawai'i's shores to update your homeowner's insurance.

That's the message of insurance officials who advise Island residents to check their hurricane policies once a year to avoid financial losses from a major storm.

"Based on past experience, there are a lot of people in Hawai'i who are underinsured either by choice or because they are unaware," said state Insurance Commissioner J.P. Schmidt.

While it's difficult to gauge the amount of underinsured homes in Hawai'i, a national study recently found that nearly 60 percent of all residences in the U.S. do not carry adequate coverage.

The study, by Marshall & Swift/Boeckh of Los Angeles, found that those lacking in coverage may be underinsuring the value of their homes by nearly a quarter.

"You may think you are fully covered but there may be limits in your policy," Schmidt said.

Homeowners are required by lenders to have hurricane insurance to cover the replacement value of their home. The problem is the replacement costs most likely have increased since the home was purchased.

Gerald Peters, president of HPS Home Improvement Services, said the costs for construction materials, such as steel and drywall, have risen between 35 percent and 60 percent in the past several years.

The increase in the price of building materials has more than doubled the cost of construction from about $100 a square foot to about $200 a square foot in recent years, said Peters, whose contracting firm specializes in making homes hurricane-safe.

That means that the cost of replacing a 3,000-square-foot home has increased from about $300,000 to more than $600,000 today, he said.

"You're going to have a hard time replacing that home for less than $600,000," Peters said.

Some insurers like State Farm Insurance Co. automatically update the coverage amounts for policy holders to keep up with inflation and increased building costs.

Sue Savio, general agent at Insurance Associates Inc., said it's a good idea for homeowners to meet with their agents each year to see if their home insurance and hurricane insurance policies are up to date.

Savio said she often will look at the size of the house and its location when calculating whether a homeowner has adequate coverage. Is the property on flat ground, or on a hillside? Is there a lanai, an enclosed garage or does it have a carport?

"The single most important thing is to sit down with your insurance agent to make sure you have the right policy with the right limits," added Steve Tabussi, vice president of customer solutions at First Insurance Co. of Hawaii.

Policies also need to be updated after extensive renovations such a new bedroom, roof or kitchen.

Savio and Schmidt also recommended that some homeowners living near streams or ponds carry flood insurance, even if they don't live in a federally designated flood zone.

Hurricane insurance and homeowners' coverage typically do not extend to damage caused by floods, even if the floods are caused by a hurricane.

Schmidt said that Mississippi's attorney general recently sued several Gulf Coast insurers to force them to pay for billions of dollars in flood damage that arose after Hurricane Katrina hit. Florida officials filed a similar suit last year to force insurers in Florida to pay for hurricane-related flood damage, he said.

Flood insurance, which is offered by the Federal Emergency Management Agency, provides a maximum of $250,000 for damage to a home and $100,000 for damage to contents.

According to FEMA, premiums for flood insurance in flood-prone areas costs between $400 and $500 a year for $200,000 worth of coverage. Flood coverage in low-to-moderate risk areas can be purchased for just more than $100 a year.

"There's certainly instances where there's a real question of what the actual cause of the damage and what is covered and what is not," Schmidt said.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.