Make Sure You Have Enough Homeowners/Condo Insurance

You never know if and when something will happen — whether it’s a big catastrophe or something less destructive – so you need to be prepared!

It’s essential to choose the right insurance company, the right price, and the right coverage for your specific situation.

Keep in mind, homeowners insurance is really a collection of different kinds of coverage such as fire, theft, liability and windstorm wrapped up into a single policy.

Whether you’re a current homeowner who may need to upgrade your coverage or someone who is purchasing home insurance for the first time, review the following steps to be sure that you have the right coverage:

How Do You Determine Coverage?

Your coverage should be based on the construction and square footage of your home, but it must also factor in how much it will cost per square foot to rebuild in case of disaster.

Your insurance company will most likely require you to purchase coverage that insures 100% of the replacement value of the home.

“The biggest misconception is that the insurance on the home should be equivalent to the purchase price, appraisal, or tax assessment (of the property), says Toni Cavallo, Private Client Advisor, McGriff Insurance. “A rebuild cost is based on replacement value, and can vary based on many factors, including lumber/materials, and labor costs.”

Be sure to take into consideration everything that you have inside the home, which will also need to be replaced in the event of disaster.

Do You Have Enough Coverage?

Get current information about what your home is worth today, and how much it would cost to rebuild it.

Make sure that your deductible is set at a price that you can afford in the event that you must rebuild or do extensive repairs to your home. As with auto insurance, higher deductibles offer greater savings annually (a lower out-of-pocket expense), but you have to pay a higher price in the unfortunate event that disaster strikes and you have to make an insurance claim. Be sure you can afford this amount when you choose your plan.

If you’ve got a special art collection, jewelry, musical instruments, or a home office with equipment and supplies, be sure to let your agent know so that they can inform you about any additional riders that might be necessary. A rider can provide additional coverage or more comprehensive than what may be provided by the home policy, explains Cavallo.

Are your financial assets protected in the case of litigation due to a fall in your home or an auto accident? “Everybody should have an umbrella, because anybody can be sued,” says Cavallo. “Start with (the basic) $1,000,000 umbrella, which starts at $160/year, and go from there based on your assets.”

What About Flood Insurance?

If you have a mortgage on your home, flood insurance will most likely be required by the lender.

Being covered for the water damage from a from a broken pipe for example, is different than having flood insurance. “A pipe can burst, leading to a flood in your basement. Most of the time, your policy will cover this, says Cavallo. If your sewers or drains backup, you need a backup of sewer and drains rider. Overflow from creeks, river, flash flooding etc. is likely NOT covered by your basic policy. Talk to your insurance agent about the difference and make sure you have the coverage you think.

Everybody needs flood insurance, even if you’re not in what’s typically considered a ‘high risk area.” Cavallo says, “Flooding can happen just about anywhere it rains or snows. Flood insurance is fairly inexpensive if you’re not in a high-risk zone.”

Do You Need to Upgrade?

For current homeowners, meet with your insurance agent to discuss what coverage you have now and let them know about any new home improvements or any new possessions that should be included in your policy.

Your agent will come out and document these upgrades, take photographs, and let you know if you will need additional coverage.

Meanwhile, be sure you have pictures and a list of your personal property. This will help in a stressful time should you have a catastrophic claim. Be sure you know where you can find your insurance policies when you need them.

Contact me at jennifer@skeltoncompany.com if you have any questions about your insurance coverage. I’m happy to introduce you to Toni Cavallo or other local insurance agents.