The cost to rebuild your home is its
replacement value. This can be very
different from the estimated market
value or actual purchase price. In most
cases, it costs more to rebuild the home
you own than to buy a new one. This is
an important insight into why your
Dwelling (Coverage A) limit is so
important.
It is critical that you provide us
with accurate, updated information about
your home and contents. If your dwelling
limit accurately reflects your home's
true replacement cost, some companies
will pay more than the limit if a
covered loss is greater than the limit
on your policy. Ask us if Home
Replacement Guarantee or Extended
Dwelling Coverage, is available in
your state.
Once a review of your home and
possessions indicates you are properly
insured, it's a good idea to reexamine
your coverages and limits from time to
time, especially whenever you make
additions or improvements.
Call us. If you have
questions or concerns about the
limits in your policy, ask us to
show you how those amounts were
calculated. This will also give you
an opportunity to make us aware of
any overlooked information.
Read your policy. Certain
property, such as jewelry, and
certain perils, such as earthquake
or flood, is better insured
separately. Knowing what is covered
and for how much will help you
insure properly. If there is
anything in your policy you don't
understand, contact your agent and
ask for an explanation.
At each annual renewal of your
policy, you receive a new Policy
Declarations page showing limits
of coverage and optional coverages.
Review this information. If you do
any significant remodeling or add a
family room, extra bedroom or
bathroom, etc., tell us about these
changes so your coverage limits can
be adjusted to cover the
improvement.
Consider carefully whether
your policy provides all the
protection you need. Does it
provide coverage for extra costs
resulting from building code
changes? Does it automatically
increase coverage limits annually to
keep pace with inflation? Does it
provide additional funds if the cost
of rebuilding your home exceeds the
policy limits?
Find out whether your insurance
company will stand behind agreed
upon repairs after a claim. Some
companies are willing to put this
guarantee in writing.
Does your policy include
replacement cost coverage for
contents (clothing, furniture,
appliances, and other personal
property inside your home)? If not,
you can add it by endorsement. The
cost is small, the protection
valuable. Replacement Cost
Coverage pays for losses to your
possessions at the cost of brand new
items. Without this option, a
covered loss to your personal
possessions would be depreciated by
their age and condition, reducing
the size of your claim settlement.
If you have an art collection,
antique furniture, jewelry, or other
valuable possessions, talk to your
agent about supplemental
coverages, such as fine arts or
scheduled property endorsements, to
adequately protect your investment
in these items. The cost is modest
for the extra protection, and often
the deductible is waived.
Consider whether you should have
more coverage for personal
property (contents) than your
policy provides. Personal property
coverage is usually 70% of the
coverage limit for the structure.
Your limit may be lower than 70%.
Supplemental protection is available
for a small additional premium.
Prepare an inventory of
personal property items, update it
periodically, and keep it in a safe
place outside your home, such as a
safe deposit box at your bank. It
will save you hours of time trying
to list everything damaged or
destroyed if you need to make a
claim. It will also help ensure you
don't forget some items. We can
advise you on ways to simplify the
job of preparing a personal property
inventory such as videotaping each
room with descriptive information on
the sound track.
Besides making sure you have
enough protection to cover possible
damage to your own home and
contents, you should also evaluate
your exposure to liability risks.
These result from damage to the
property of another, or injury to a
person, not a member of your
household, for which you can be
responsible. In recent years it's
become common for homeowners to be
sued for injuries or damages to
others, even when there is no
evidence of negligence by the
homeowner. The reality today is if
you have any appreciable assets, you
are exposed to the risk of being
sued. Even if you ultimately prevail
in court, your legal fees and the
months or years of worry and
uncertainty can be a terrible burden
on you and your family.
The Personal Liability coverage
provided by your Homeowners Policy
usually provides a limit of $100,000
or $300,000. We recommend increasing
this protection with a personal
umbrella policy. Not only will it
increase your personal liability,
but also your auto liability. Limits
are available from $1 million to $10
million and beyond. The cost of this
coverage is usually very reasonable.
