That’s why it’s important to be properly insured. Being over insured is a waste of money and being under insured could be financially devastating. Your home is probably your single largest asset and you need to protect what you’ve worked so hard for.
To properly insure your home and possession we need to be aware of four main areas:
1. Do I have enough to insure my home and to rebuild it in the event that it is destroyed?
Forget about market value and the property appraiser’s just value, your home needs to be insured to cover the cost of rebuilding at current construction costs. Several items to take into consideration are:
Increased Replacement Cost
Ordinance or Law
Water Backup and Sump Overflow
Fungi, Mold, Wet/Dry Rot
2. Do I have enough insurance to replace all of my possessions?
Your homeowner’s insurance policy on a single-family residence in Florida generally covers your Personal Property for 50% of what you insured the Dwelling for in case of their being stolen or destroyed. If you are unsure of the value of your personal possessions, you may consider going online and downloading a free version of some home inventory software.
Again, as with the dwelling, we first have to consider if you are insuring your possessions for Actual Cash Value or Replacement Cost. ACV is just what it appears to be. It’s the cost of replacing a covered item minus depreciation. Replacement Cost on the other hand is what it would cost to replace the item with a like/similar item. We’ll go further into detail in ensuing posts.
Other items that need to be considered are:
Personal Property Coverage
Replacement Costs on Contents
Home Computer Coverage
Additionally, do have quite a bit of jewelry? Do you a stamp or coin collection? How about artwork? Do you have a gun collection? Yes, you are covered for set amounts under your policy, but do you need more to properly insure these items?
3. Do I have enough coverage for additional living expenses?
This comes into play if you can’t live in your home due to some disaster and have to temporarily live elsewhere. This does cover many items, but only over and above your regular living expenses. Generally, you are allocated 20% of the Dwelling Coverage towards Loss of Use.
4. Do I have enough insurance to protect my assets?
Now we’ve talked about your home and personal possessions, but what about coverage against lawsuits for bodily injury or property damage. Your Personal Liability Coverage generally is pegged at $100K, but you should definitely consider increased limits. The coverage pays for defending you in court and any damages awarded the other party up to your policy limit. Also, do you have enough Medical Payments coverage in case someone is injured on your property?
We’ve just touched on a bit about Homeowner’s Insurance. Do you have a boat that you store on your property? Do you run a business out of your home?
In future posts, we will delve more in depth into the main items we’ve brought up here today and into other aspects of Homeowner’s Insurance.
If you would like us to review your policy and coverage, we’d be more than happy to assist.