Is Your Home Fully Insured?

For our first posting of the New Year, we wanted to touch on a slightly more general subject, your homeowners insurance.  If you’re like most Americans, your home is your largest investment, so you know how important it is to protect it.  

But are you "fully" protected?  Yes, this is a slightly loaded question, but if you are not, you are running the risk of having to pay money out of your own pocket to rebuild your home after a loss, to replace stolen items or to settle a liability lawsuit.

Now everyone has a different appetite for risk, and depending on what you are comfortable with here are some key questions to consider when evaluating your homeowner/condo owner or renter’s insurance policy.  Keep in mind, some of these endorsements may have a cost associated, but often times you can look to increase your deductible and as a result have a smarter insurance purchase.

1.  Are you working at home? Do you have a home-based business? If so, you’re not alone—40% of Americans operate a home-based business that provides their sole means of living or extra income. Most people don’t know that their standard homeowners insurance provides very limited coverage for business property and generally no liability protection for business use of the home. You can get this coverage added to your homeowners policy by an endorsement or by purchasing a separate business policy.
2. Do you have recreational vehicles? Watercraft, snowmobiles, ATVs and similar recreational vehicles can make for some enjoyable weekends and vacations. But you should know that liability coverage for these type of vehicles is not provided by your homeowners insurance. Accidents happen. So add this critical coverage to your policy by an endorsement or addition.
3. Did you build an addition recently? If so, did you update your homeowners policy? Most Americans neglect this important step, leaving their family vulnerable to significant out-of-pocket expenses to rebuild after a loss. New additions to the structure and grounds may increase your liability and coverage needs. So, if you’ve added a pool, another bedroom or a home theater, you best inform your insurance agent so that you can be adequately protected
4. Will your policy pay to rebuild or replace your home? There has been a recent ballooning in the cost of building materials. These increases directly impact the amount of insurance homeowners must carry to avoid costly penalties for being under-insured. Get a home appraisal now so you can determine how much homeowners insurance you need to rebuild or replace your home.
5. Do you own an historic home? If the answer is yes, your home poses a unique requirement on your homeowners insurance. That’s because older homes do not meet the stringent building codes in effect in most towns and cities today. If there is a loss, your old home will have to be rebuilt to the new code. A standard homeowners policy limits increased construction costs and the lost value of property. Again, add this coverage as an endorsement to your policy.
6. Do you have expensive items or a collection? Most standard homeowners policies limit coverage for high-value items like expensive jewelry, art collections, antiques and other collectibles. Think about how valuable these items are to your family—both monetarily and emotionally—and decide if you need to secure additional coverage either by an endorsement to your homeowners policy or through a specialty policy.
7. Get an alarm system. Unfortunately, there are crooks among us who are looking to take away your prized possessions.  If you don’t own an alarm system, get one. It is a great deterrent against break-ins and could save you money on your homeowners insurance. Test it regularly—at least monthly—to ensure it is operating properly. And, most importantly, use it. An alarm system will not dissuade burglars if it’s off!
8. Got a pet? Fido sure is cute. But he could cost you a lot of money if he bites the neighbor’s kid or the mailman. Pet bites and attacks are one of the most common causes of homeowner liability claims. Insurance companies judge certain breeds to be more dangerous. Some, such as pit bulls, may be excluded from coverage altogether. Before adopting a pet check with your insurance company to ensure it will be covered by your homeowners insurance.
9. Here's the kicker - Significant Other? Significant Potential Issues.  If you are not married and living with a significant other (SO), there are some important things you should understand about your home insurance.  Standard home insurance is designed to cover damage to personal property like furniture, electronics and clothing that is owned by residents of the home who are related to the person named on the actual home insurance policy (i.e., you). The term “related” is where your SO’s problems begin.

Here are just a few limitations found in a standard home insurance policy that you and your SO should know:

1. There is no personal liability insurance offered to individuals residing in the home who are not related to the person whose name is on the home insurance policy. 
2. Personal property of a non-relative is not covered by your home insurance. This means no coverage for claims like when your SO’s laptop is stolen from home or school. 

There are a couple of options; in some cases it is possible to modify a standard home insurance policy to cover losses to your SO’s personal property. However, this won’t fix everything. The best solution is for your partner to purchase renter’s policy which will offer your SO protection for expensive property losses and/or a significant liability expense.

Now, this is not a comprehensive list, but it is a great place to start and begin the conversation.  By addressing these issues now you can prevent costly claims and save money on homeowners insurance premiums over the long term. And, your family will have peace of mind knowing that your homeowners insurance will be there no matter what life and Mother Nature throw at you.

Thank you for reading, have a happy and safe 2012!

Mystic Insurance is a local Trusted Choice^® agency that represents multiple insurance companies, so we offer you a variety of personal and business coverage choices and can customize an insurance plans to meet your personal or business needs. You can visit Mystic Insurance online at www.MysticIns.com or call us at 781-396-0482. Or Click here to find the Trusted Choice^® agency nearest you.