Top 5 Things You Should Know About Homeowner’s Insurance
Does your homeowner’s insurance actually have you covered? If disaster were to strike, would you have to worry about an obscene deductible or no coverage at all for certain assets? Would you have to worry about only receiving a fraction of what your home and possessions are worth? This list goes over 5 things you can do to make sure you’re covered – for your property and possessions – fully.
1. Buy the right insurance for your home, property and possessions.
This should be dependent on several factors. Start by making a list of what you have and what needs covered. Look at your homeowner’s insurance coverage in four areas: your home, belongings, your liability to other people if something were to happen while they were present, and the cost of living if you needed to leave your home. If something happens and you need to use your homeowner’s insurance, you need to be able to rebuild your house and replace all of your possessions. Not only that, but you need enough liability coverage to protect you in case you get sued.
2. Know that replacement value insurance is different and may not be included in your policy. Also know that it should be considered…
If something were to happen and you had to utilize your homeowner’s insurance, unless you have replacement value insurance coverage, your insurance company will take the “fair market value” or “cash value” of all of your possessions and then come to a conclusion on how much they owe you, as if it were a garage sale. Replacement value insurance, on the other hand, actually takes the retail price of the item and calculates how much it would cost you to go out and buy everything again. Look into extended or guaranteed-replacement-value coverage when shopping around or updating an existing policy.
3. Take an extensive inventory of everything with a video camera or camera phone (if possible).
The absolute best way to prove that you own all of the things you own is by actually keeping a video of them. When you file a claim, you will 1) need to prove that you owned the items and 2) verify that they are worth what you’re saying they’re worth. So, if you have a video camera or a smartphone – if you don’t have one of those, borrow one from a friend or rent one –go through your home (and any other structures) with it and shoot video of everything. Walk through each room one by one and sweep over everything, getting it all on tape, and then make copies. Be sure to remember the attic, basement, closets, etc. It’s really important to email the copies of the video to yourself, or put them on a thumb drive (or both) and keep them somewhere other than your house, for obvious reasons. Keep it at a friend’s house or at work in your desk/locker.
4. Get a policy with floaters.
The run of the mill homeowner’s insurance policies will have a cap on the amount you can collect on the big-ticket items such as furs, jewelry, computer equipment, etc. This will usually result in the policy covering only a fraction of its actual cost. A lot of people own items that are worth over $1000 … and if you do, you should get add-ons to your policy, called “floaters” or “endorsements,” for each of the big ticket items. The good thing about these items if that they can also be reimbursed if you simply lose the item. If you ever purchase anything of high value, you should sale the receipt/bill of sale and fax a copy of it to your insurance agent and then keep the original yourself (with your copy of the inventory). If you have an antique item, get it appraised. Again, save a copy of the appraisal and send it to your agent. This will automatically save you time and stress of having to prove that you owned the item in the first place.
5. Consider an umbrella policy.
An umbrella policy adds liability insurance, which will cover you in case anyone gets hurt in your home or on your property at the scene of the disaster. It can also cover you if someone is hurt due to the direct action of a family member. Liability suits tops out at $300,000 but people will start out at $1 million.