Mistakes to Avoid When Insuring Your Home
Getting the right property and casualty insurance coverage may not be your first priority. Compared with investment decisions and estate planning issues, questions about the language in your homeowner’s policy, may seem hardly worth considering. However, the more successful you become, the more complicated your asset-protection needs to be.
Safeguarding yourself and your family may mean buying additional coverage, but more insurance isn’t necessarily the solution. It’s important review your coverage needs and potential specialized policies with other aspects of your financial situation. Here are 6 different shortcomings that could prove costly.
- Leaving Gaps in Homeowners Coverage – Homeowner’s needs to review coverage regularly to keep up with rising replacement costs. But insuring different kinds of homes in different locations can pose extra challenges. If you purchase insurance from more than one carrier, be aware, that you may face contrasting rules, limitations, and policy renewal dates. For example, the liability limit on a second home might fall below the minimum on an excess liability policy designed to complement the insurance on your primary home. If this is the case, you could wind up responsible for the difference.
- Ignoring Properties Unique Characteristics – One perk of affluence, is the means to own exceptional homes; one drawback is that they may be difficult to insure adequately. Standard homeowner’s coverage won’t pay for the materials or craftsmanship to rebuild that 19th century showplace you’ve painstakingly restored. Depending on location, natural disasters such as, hurricanes, earthquakes, or wildfires can all pose a threat to your property. Meanwhile city co-ops or condos may need policies tailored to their buildings or associations coverage.
- Under-insuring Arts and Collectibles – Standard homeowner’s policies limit coverage for the losses of antiques, furs, and other valuables. While you could get additional coverage for insuring the real value of a collection of contemporary art or vintage muscle cars, it will likely require a specialized policy. Because of this, these policies involve having your collection professionally appraised so that your policy is specially tailored to fit your needs.
- Forgetting to Insure Household Employees – When someone works for you or your family, as a nanny, landscaper, personal assistant, or in another role, you could be liable for medical expenses or lost wages if the worker is hurt on the job. Several states require that household employers pay into a worker’s compensation fund, while other states make it optional. But, providing such insurance may be mandatory when ensuring your financial well-being.
- Neglecting Your Liability as a Board Member – If you are a director of a nonprofit’s board, excess liability coverage could help protect you. Depending on your role, you may want to consider a special directs and officer’s liability insurance.
- Failing to Get Frequent Policy Reviews and Updates – Your financial life isn’t static, and neither are your insurance needs. The value of your collection may increase; extensive home renovations could mean a sharp rise in the value of your property; and the retitling of assets as part of your estate because of divorce, a death in the family, or the birth of a child could require policy changes.