If you’re
like most homeowners, you carefully selected a homeowner’s insurance policy
when you purchased your home. You made sure that you had adequate coverage
based on the value of your home, its contents, and your financial needs at the
time. However, if you’ve been in your home for a number of years, it’s highly
likely that your situation has changed – for better or for worse. For example:
Your home may be over- or under-insured.
The cost of rebuilding in your community may be
much higher now than it was at the time of purchase.
You may have valuable personal property that is
not fully covered.
You may have higher.
You may be paying too much.
You may have liabilities that aren’t adequately
covered such as a potentially vicious dog or a swimming pool.
Whether
you are hoping to save money by finding a better insurance policy or increasing
your deductible in exchange for lower premiums or want to ensure that you have
the right amount of insurance for your situation, now is an excellent time to
review your insurance policy.
Dwelling Coverage
The first
step is to examine your current policy and compare your existing coverage with
your current insurance needs. Have you added on to your home either through a
remodel or by adding a pool or outbuildings? Chances are, your lender would
have insisted that you increase your insurance at the time but this may have
been overlooked if you self-financed the addition.
In
addition to considering the additions to your home, consider the cost to
rebuild should your home be completely destroyed. Your home may have increased
or decreased in value since you purchased it but the home’s market value is not
what you are insuring. You are insuring the cost to rebuild it from the ground
up and these costs are not related to how much the home is worth but rather
they are related to how much local building costs and materials are at the time
you need to rebuild your home. Check with your local building association, real
estate agent, or insurance agent to find out how much local rebuilding costs
are per square foot and then multiply that number times the square footage of
your home to determine an approximate rebuilding cost. Make sure that your home
is insured for at least this much, more so if your home is extensively
upgraded.
Personal Property Coverage
Next, take
a look at your personal property coverage. Have you accumulated a lot of
possessions since you moved in? Are all of these items covered? Probably not,
especially if your policy limits artwork, jewelry, furs, coin collections, and
electronics. Pay close attention to the details of the policy and consider
purchasing endorsements for valuable items currently limited by your policy. In
addition, make sure that your policy offers “replacement cost” coverage rather
than “actual cash value.”
Liability Coverage
Your
homeowner’s insurance policy provides liability to others, up to policy limits.
If you or a family member causes bodily harm to others, even off your property,
this liability coverage provides protection, up to policy limits, against
lawsuits. It also covers damage caused by your pets; however, some breeds of
dogs may be excluded so pay attention to the policy’s terms and consider
increasing your liability coverage’s if you feel the amounts are not adequate.
In addition, you may want to consider an umbrella policy depending on your
financial circumstances and net worth.
Living Expenses
If your
home were to be completely destroyed, where would you live while you rebuild?
Does your policy provide for living expenses such as rent during rebuilding?
Does it provide temporary benefits such as paying for hotels and meals during
an evacuation?
Additional Considerations
Many insurance companies offer guaranteed
building cost, building code coverage’s, and inflation guard options that
provide you with additional peace of mind that you will not quickly outgrow
your coverage.
Raising your deductible can reduce your
homeowner’s insurance premiums.
Shopping around can yield better coverage’s at a
lower price.
You may qualify for discounts for items like
security systems and automatic fire sprinklers.
You may qualify for discounts if you insure your
cars and homeowner’s insurance with the same company.
By: Mr. Mark Decherd
For more
information and other articles by Mark Decherd go to:
Dryout®
Inc.
http://dryout.typepad.com/water-damage-answers/
239-437-7100
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