Homeowners Insurance
As many as two-thirds of U.S. homes are underinsured by an average of 35 percent. Make sure your home is fully covered by following these six steps.
Determine the actual cost of re-building your home.
Contact your insurance agent to help you determine the cost of re-building.
You'll need to provide the square footage, as well as, details about your
home's construction. Do not go by it's market value, which includes the
value of your property.
Make sure your replacement cost coverage is guaranteed.
The guarantee means your insurer will automatically adjust your coverage to
keep pace with rising construction costs. When you choose replacement cost
coverage, inquire about inflation guards. This option automatically raises
your coverage, and your premium, annually to keep up with inflation. In
addition, if you make expensive improvements or if real estate values in
your area outpace those in the rest of the country, contact your insurance
agent. Your home's replacement value may rise sharply after making expensive
improvements.
Homeowner's policy does not cover floods.
You must purchase a separate policy for flood insurance. Insurance agents
sell the government's flood coverage for about $100 to $350 a year.
Inquire about coverage for "luxury items."
Many homeowners' policies set relatively low limits on the basic coverage of
"luxury items," such as jewelry, furs, silverware, or electronic equipment.
If you own a high-priced valuable, consider adding a rider or floater to
cover that item specifically. Issued either separately or as an endorsement
to your regular policy, a rider or floater covers each insured item up to a
designated amount. To purchase additional protection, you must provide a
copy of your receipt or an appraisal of the item you want to insure.
Consult your insurance agent if you work at home.
If you've recently started working at home, you're probably underinsured.
Call your insurance agent and arrange to upgrade your policy. Your
homeowners' liability policy may not cover business-related liabilities.
Therefore, you may need to purchase a separate business liability policy,
for additional coverage.
Be sure your insurance agent has up-to-date information.
You may qualify for a significant insurance discount if your home is
equipped with a centrally monitored alarm system, smoke detectors, motion
detectors or an inside sprinkler system. Some companies even offer reduced
premiums to retirees whose increased presence in the home reduces the risk
of burglary. In addition, other safety discounts may apply if all the
occupants of the home are nonsmokers.
Be sure to check your policy to confirm that your insurer uses the most up-to-date information to determine your premium.