Insurance Pitfalls

It is easy to assume that since you have a homeowners (or renters policy) and auto policy that you would be insured for anything that could happen.  That might not be the case.  Here are some insurance pitfalls to watch out for.

Limits on Coverage– Review your homeowners policy to confirm you have sufficient limits to replace your home in the event your home is destroyed.  Replacement Cost coverage is a must.  Guaranteed Replacement Cost is recommended.

Liability Coverage– If you are sued for bodily injury or property damage, will your policy provide you with the protection you need?  Consider a $1 million umbrella policy at a cost typically between $200-$350.  This policy provides additional liability coverage above and beyond your homeowner and auto policies.

Personal Property Coverage– The standard homeowners policy typically insures against loss of personal property in an amount equal to 70% of the insured value of your home.  Additional coverage can be purchased and may be needed especially if you have old coins, painting, antiques, etc.  Your policy has limitations in coverage for items such as fine art, jewelry and guns that are lost or stolen. These items can be scheduled separately in order to get the coverage needed.

Personal Property Away From Home–  The standard homeowners policy provides coverage equal to 10% of your personal property limits for your property located away from your premises.  If you have a mini-storage unit or other off premises storage, review this limit to determine adequate coverage.

Personal Property Inventory– In the event your home and property is destroyed, will you be able to identify all of your things that your insurance company will pay for?  It is strongly recommended to take a video inventory of all of your belongings.  This will prove to be extremely beneficial at the time of loss.

Coverage for Natural Disasters– Your standard homeowners policy does not provide protection against flood or earthquakes.  This coverage can be purchased separately.

Sewer/Drain Backup – This coverage must be specifically endorsed on your policy.  It can typically be purchased in $5,000 increments.  Spring rains will often result in basements full of water.  Be sure you are protected.

New Car Replacement– Your standard auto policy will pay the actual value of your auto.  This value may be much less than what you paid for the car when depreciation is calculated.  This is an important coverage for new cars.