Keeping your home properly insured can save you a lot of grief and disappointment later if you have to file a claim. A large amount of homes in America are underinsured. Below are 6 steps you can take to keep your home from being underinsured.
1.Know your policy type and what it covers:
Depending on the type of home you have, your policy type should reflect your needs. It is important to understand your policy basics. You will want to make sure your policy covers a wide variety of perils. It is also important to ask your agent what other types of policies are available in order to compare coverages. If you have an older home, or one that has special features such as hardwood floors and carved moldings, you will want to make sure you have special coverages for these features since they are more costly to replace than a standard floor or molding.
2.Keep up to date on building prices in your area:
Besides liability protection, your home insurance policy amount insures the building structure and various possessions, not the land. Most good policies have an annual built-in inflation protection increase in the insured amount, but check to make sure the annual increase is enough to cover your home. The best way to get an idea for rebuilding costs in your area is to research the average per square footage cost. You can research this in a variety of ways such as talking to building contractors or real-estate agents.
3.On a regular basis assess your personal property:
Some property such as computers, boats, and jewelry have only limited coverage in a standard homeowners insurance policy. It is important to review your personal property insurance needs and consider buying additional coverage above and beyond your policy.
4.Donít forget those remodeling projects:
Those remodeling and renovating projects add value to your home and in turn drive-up the cost to re-build. Make sure you contact your agent on a regular basis about any past remodeling projects or future ones planned. In addition, your agent should be able to give you an estimate of how a particular home improvement project will affect your insurance costs.
5.See what additional coverages are available:
With the ongoing occurrence of hurricanes, floods, and mudslides, you will want to make sure your policy covers any gaps in your current insurance, so take the time to check about any additional coverages that may be available to you. Also, considering an umbrella insurance policy will give you added protection above and beyond you current policy. Furthermore, if you conduct any type of business from your home you might want to consider special insurance for home business use.
6.Review your findings and concerns with your insurance agent:
After implementing the 5 steps above, it is important to review your findings and concerns with your insurance agent. Your agent may also be able to offer you additional coverages that would best fit your individual homeowners insurance needs.
Start by making a list of your possessions, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals.
- For clothing, count the items you own by category pants, coats, shoes, for example - making notes about those that are especially valuable.
- For major appliances and electronic equipment, record their serial numbers usually found on the back or bottom.
- Don't be overwhelmed! If you are just setting up a household, starting an inventory list can be relatively simple. If you've been living in the same house for many years, however, the task of creating a list can be daunting. Still, it's better to have an incomplete inventory than nothing at all. Start with recent purchases and then try to remember what you can about older possessions.
- Big ticket items: Valuable items like jewelry, art work and collectibles may have increased in value since you received them. Check with your agent to make sure that you have adequate insurance for these items. They may need to be insured separately.
- Take a picture: Besides the list, you can take pictures of rooms and important individual items. On the back of the photos note what is shown, where you bought each item, and the make. Don't forget things that are in closets or drawers.
- Videotape it: Walk through your house or apartment videotaping and describing the contents. Or, do the same thing using a tape recorder.
- Use a personal computer: Use your PC to make your inventory list. Personal finance software packages often include a homeowners room-by-room inventory program.
- Storing the list, photos and tapes: Regardless of how you do it (written list, floppy disk, photos, videotape or audio tape), keep your inventory along with receipts in your safe deposit box or at a friend's or relative's home. That way you'll be sure to have something to give your insurance representative if your home is damaged. When you make a significant purchase, add the information to your inventory while the details are fresh in your mind.
Click on the home inventory checklist provided in our forms section for a printable home inventory checklist.