Are you sure your assets are protected?
WHAT IS THE RIGHT AMOUNT OF INSURANCE COVERAGE?
Severe weather and accidents are part of life, and every home experiences loss or damage of some kind, at some point. You can’t predict when you will experience a loss, but you can protect yourself financially with the right amount of insurance coverage.
A recent study concluded that 69 percent of homeowners are under-insured. Unfortunately, many homeowners think they are fully protected and are stunned to find out at the time of loss that their coverage is inadequate.
Getting the right homeowners insurance coverage for your home and belongings depends on many things, from flood or wild-fire hazards, crime rates, tornado risks in your area to the specific personal property coverage and deductibles that makes the most sense for your household.
Here are a few key strategies presented by the Independent Insurance Agents of Wisconsin (IIAW) to consider in making sure you have adequate home insurance:
- Increase your liability insurance with an umbrella liability policy, which will provide liability coverage up to $1 million or more.
- Get replacement cost home insurance to cover what it would cost to replace your home and personal property, instead of “actual cash value” coverage, which will only cover the current depreciated value.
- Be sure to read over the policy’s exclusions carefully and ask your agent if any of these items are a risk, and if you can purchase additional insurance to cover them.
- Add coverage for specific items of value, such as jewelry, art and collectibles, through “endorsements” or “riders” on the policy.
While you may be able to buy online homeowners insurance, consider instead working directly through a local agent who can provide in-depth explanations of each aspect of your policy. Be sure to talk with a qualified agent who understands your geographic area and can help you make sense of the many options available to you.
WHAT DOES HOMEOWNERS INSURANCE COVER?
Broadly speaking, insurance covers you for potential loss resulting from risks such as water damage, burglary or theft, severe storms, fire and also your personal liability. The specific risks you may face as a homeowner could include floods and sewer backup, which you must cover with separate policies, as these disasters are not included in home insurance.
Your home liability coverage protects you in the event that someone is injured on your premises or you are responsible for damage to someone else’s property. You homeowners insurance can even protect you against injury you cause to another person off-premises under certain circumstances (liability insurance will not cover acts of violence or intentional damage.)
Your liability insurance would also typically provide coverage if:
- Your child throws a baseball through the neighbor’s window
- Your dog bites a visitor to your home
- A visitor is injured on your backyard swing set or trampoline, or by falling on your icy sidewalk
- A dinner guest gets food poisoning and is hospitalized
If someone files a liability claim against you, your insurance can pay for property repairs, medical or funeral costs or even a lawsuit if the injured party chooses to launch a legal process.
MAKE SURE YOUR PERSONAL BELONGINGS ARE COVERED
When choosing the amount of personal property coverage you want for your belongings, consider what it would cost to replace all of your personal items after a total loss. Many homeowners assume that all of their belongings are fully covered until they experience a loss. Depending upon the type and amount of coverage in the policy, personal items may not be covered, or may only be covered up to a depreciated value. In most cases, this amount is far less than what it would cost to replace them.
The following steps can help you determine the value of your items and be prepared in the event that you need to file a claim:
- Compile an inventory of what you own, room by room.
- Take pictures of your belongings, particularly anything of high value.
- Keep receipts for all valuable items you purchase, including appliances.
- Record a replacement value for each item on your inventory.
- Go over this list with your insurance agent and determine whether you need to purchase additional coverage to be protected in the event of a loss.
- Place your inventory list, images and receipts in a secure place such as a fire safe.
These records will help you to complete the claims process more efficiently and accurately if you suffer a loss.
Getting coverage for the risks of owning a home is simply a wise investment. When you buy home insurance, you are protecting your financial future and acquiring peace of mind. Take time to seek good advice from a knowledgeable agent and when evaluating the amount of liability coverage that makes the most sense for you, be sure to fully discuss your limits and deductibles with your agent. In the event of a disaster, the costs of recovering can devastate household finances. Quality home insurance can make a difficult situation bearable and help you get your life back on track.