Year-End Risk Review

Year-End Risk Review

Start the new year off with some peace of mind with an insurance checkup. Today we will take a closer look at homeowners insurance, an important component of your holistic financial picture.

Has your homeowners coverage kept up with your home’s value? Rising construction costs in some areas have resulted in some existing homes being underinsured. Guaranteed replacement cost coverage insures the home for the full cost of rebuilding. An inflation guard feature may not be enough, as construction costs may increase faster than inflation, leaving you at risk if your home is completely destroyed. Also verify the square footage of your property and document the interior and exterior condition of your home, especially if you have made improvements or additions.

Your homeowners policy also covers the contents of your home. Document with photos or video important items like jewelry, tools, artwork, appliances and electronics. Also record serial numbers for appliances and electronics. Provide a copy of your records to your insurance company while keeping a copy in a fire-proof safe for yourself. Rare items like antiques, artwork, jewelry and coins may need an appraisal to ensure you get a fair replacement value. If you own a condo or townhome, you made need additional coverage for personal property beyond the association’s policy.

Home-based business owners often assume their homeowners coverage also protects assets owned by the business. Best to double check by making an inventory of equipment and furniture. If your home is destroyed, you’ll be out of work for a period of time. A home-business endorsement can also cover that loss of income.

We’ve only covered homeowners insurance, but now is a great time to review your auto, umbrella liability, disability and life policies. Your advisor can work with you and your insurance professional to make sure you have the most effective coverage to protect your wealth.

FINANCIAL FACTS

Very Few – Only 49 of the 500 individual stocks in the S&P 500 have decreased in value YTD through the close of trading last Friday, Nov. 29, 2013 (source: BTN Research).      

Back In Time – Home prices across the United States at the end of the third quarter 2013 are at the same level that they first reached at the end of the second quarter 2005 or more than eight years ago (source: Office of Federal Housing Enterprise Oversight, BTN Research).  

$500,000 Folks – For tax year 2011, 0.62 percent (i.e., approximately two-thirds of 1 percent) of the 145.4 million filed tax returns reported adjusted gross income of at least $500,000. Those high income Americans received 16.1 percent of all AGI in the country and paid 30.4 percent of all federal income tax (source: Internal Revenue Service, BTN Research).