Wednesday, March 5, 2014

1 out of Every 3 Homes are Underinsured - Are You One of Them?

Making sure that your home is properly insured is extremely important. Home owner’s insurance policies can be complex and there are so many choices that it’s not easy to be sure that you have adequate coverage for every possible situation. One thing is for sure however, if you experience a major catastrophe at your home and it is not covered, you are going to be in a world of trouble.

I am the first to admit that I am not an insurance expert but I do have a pretty good understanding of some of the more important points to consider when you need to insure your home. Here are some things to consider whether you are buying a new home or it’s time to review an existing policy.

Most basic homeowner policies will at a minimum cover the structure and most of its contents. Normally this would include damage caused by fire and smoke, lightning, storm damage (this is different than flood damage), explosions, vehicles and other catastrophic events. Many policies also cover such incidents as vandalism, riots, broken glass, burst water pipes or water leakage within the home and even failure of vital systems such as heating or cooling.

Beware that many possibilities are not covered by certain standard insurance policies. This may include such occurrences as flooding, hurricanes, earthquakes and other natural disasters. It is also possible that a “standard” policy won’t cover things outside of the home such as things that you may take with you on vacation or a business trip although some policies do in fact cover these types of situations.

Regardless of what is covered in your homeowner’s policy it is always best that you are insured for the actual replacement costs of items and not only the original cost when they were purchased or installed. Inflation coverage is another good option. This means that the amount of coverage on your home and property will increase automatically to keep up with the inflation rate.

Personal liability coverage is also very important. Simply put, if your ladder falls over and breaks the neighbor’s car windshield, you’re covered. If someone trips over the garden hose and breaks their ankle, you’re covered. This can include medical payments for injuries and possibly even your legal costs if you are sued.

The next consideration you have is how much insurance you need. This is just as important as having a good comprehensive policy because not having enough insurance is almost the same as having none at all. There is no shortcut here; you need to take an accurate inventory of everything that you own in order to figure out its current value. In this way you can be sure that you can replace everything that could be lost in a catastrophe. Don’t forget to include the valuables as well. Rare coin collections, jewelry and furs, expensive artwork, jewelry and other high value items may also require additional insurance to ensure that you are adequately covered in the event of a loss.

As I had mentioned in the beginning, insurance for your home can be a very involved subject but it is definitely worth your time to make sure that you are adequately protected. If you currently own your own home why not take the time to review your existing policy? You might find that it’s time to “upgrade” your existing coverage. If you are in the process of buying a new home be sure to ask plenty of questions from your insurance carrier to make certain that your new investment is properly protected. In either event I strongly suggest that you speak with an insurance professional about what type of coverage is best for you. Someday you might be glad that you did.

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