Is Your Home Insurance Keeping Up With Your Home?
These days most of us are watching what we spend and major purchases are often something we save for over a long period of time. That's why it's becoming increasingly important to protect our assets—they're tough to replace. One of the best ways to protect what you've worked hard for is to make certain your home and personal property are adequately insured. While most of us have home insurance, we tend to pay little attention to the details of exactly what it covers and whether it's enough. Most policies cover your home and contents against losses from fire, vandalism, burglary and other perils, however the exact nature of the coverage varies from one policy to another. For example, some policies automatically insure contents for a percentage of the building limit. For example, if your building is insured for $120,000 and your policy allows for 75%, the contents would be insured for $90,000. This is where some people make a mistake. Ninety thousand dollars sounds like a lot of coverage but when you do a quick inventory of your belongings and add up what it would cost to replace them, you might be astounded at the result. And $90,000 is often not enough. Here are three ways to make sure you have enough coverage. First, add replacement cost coverage to your policy. This ensures your loss will be paid based on current cost of replacing or repairing the item, without any deduction for depreciation. It's comforting to know that if your ten year old bedroom suite is destroyed, you'll get enough money to replace rather than simply the amount it's worth today. Second, review your policy to see if there are any limits on items like jewellery, furs, or coin collections. For example, the limit on jewellery can range from $1,000 to $10,000 depending on your policy. Since these items may be worth more than your policy's limit, it's advisable to insure them separately based on their appraised value. Third, to help determine how much personal property coverage you need and to help provide proof of ownership in the event of a claim, take stock of the contents of your home.
There are several ways to record this information.
• Write down a description of your possessions room by room and keep any receipts with the list.
• Videotape a walk through your house, verbally describing the items you're taping—include serial numbers and purchase dates.
• Take pictures of the major items and attach a receipt to the back of the photo.
It's important to update this record on a regular basis. It is wise to leave it in a safety deposit box so that if your home is damaged or destroyed, your record won't be destroyed along with your other things. Some insurance companies have developed inventory forms to make the job easier. The key with any type of insurance protection is to identify your needs and with the help of your insurance company, design a policy to meet those needs. Once this is done, you should review your policy annually to make sure your insurance is keeping up to the value of your home and contents.