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HOMEOWNER'S INSURANCE TIPS
Unfortunately, many homeowners discover that they
are not covered until after a disaster occurs. Below are
some tips to follow that will ensure you have the
protection you need.
Understand the claims process
Many policies are very similar to each other,
offering identical coverage. However, these same two
policies can be very different when it comes to settling
claims. It is important that you determine exactly how
claims are handled. Are you going to receive the entire
claim upfront, or only a portion of it? Will you be
compensated for everything you have lost, or only the
items you replace?
It is common for some policies to grant you the cash
value of your possessions right after your loss, and
wait to reimburse the replacement value once you the
items are replaced. You will be asked to provide
receipts as proof. This scenario can be problematic if
you have no money to buy the items that need to be
replaced.
Equally vital is the amount of time you have to replace
your items. For example, if you are going to have to pay
to stay in a hotel, you probably are not going to want
to go on a shopping spree any time soon. Ask your agent
how long you have to replace your stuff.
Take inventory
There are two steps involved with filing a claim --
being able to prove that you owned certain items and
confirming their value. This is simpler to do when you
still own these things. Use a video camera to record all
of your items that you own on tape. Make sure that you
go through your entire home. An alternate method is to
write a list and take several roles of film. Store your
video or pictures somewhere safe, like a safety deposit
box.
Purchase floaters
It is very common for a homeowners policies to limit
the amount of money that can be collected on large
ticket items. For example, you will only be able to
receive a fraction of the actual value on items like
jewelry, computer equipment, furs and other types of
fine collectibles You can purchase a 'floater' for
each of these items. Floaters will replace damaged goods
as well as lost items. Keep receipts for new purchases
and have older goods appraised. All receipts and
paperwork confirming ownership and price should be faxed
to your agent so that you never have to worry about
having to prove that you possessed an item or how much
it is worth.
Always consider the cost of inflation
It may have cost you $150,000 to
build a new home 10 years ago. However, it would
cost $250,000 to replace today. Some insurance carriers
offer 'inflation guard', which will cover the increasing
cost of having to rebuild. It is important to ask your
agent if your policy offers this.
Co-op and condo owners need to protect their property
This entails contacting the condo board and making sure
that there is a policy in place that protects the common
areas. Make sure you obtain a copy. In addition examine
the association bylaws to determine what aspects of the
home you must cover.
Condo owners are going to need more insurance than
renters being that their contents policy is going to
need to cover things like fixtures and cabinets.
Assessment coverage should also be considered for condo
owners. If their is a loss that is to big to be covered
by the condo association's policy, or if there is a
hefty deductible, the association will split the
additional costs among the members in the form of an
assessment. With assessment coverage, your insurance
carrier pays the bill.
Think about buying earthquake and flood insurance
Obviously these types of insurance are not for
everyone. However, if you live in an area that is prone
to any type of natural disaster, it is important to note
that almost no property policies cover these disasters.
There are independent carriers that do offer both. If
you need flood insurance, contact the
National
Flood Insurance Program. Californians can obtain
earthquake insurance through the
California
Earthquake Authority.
Buy an umbrella policy
If somebody gets hurt on your property, your liability
insurance will top out at $300,000. However, nobody sues
for $300,000. The lawsuits usually start at $1million.
Umbrella policies are relatively inexpensive for what
they offer. A couple of hundred dollars/years equates to
one or two million worth of coverage.
Contact your agent after a life changing event
Getting
divorced or
married? Kids moving out, or back home? The amount
of coverage you need changes over the years. Staying in
touch with your agent will result in being up-to-date on
your policies and inventories.
Related Reading:
-Private
Mortgage Insurance
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