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Coverage | Home Coverage | Life
Coverage
HOW MUCH COVERAGE TO
I NEED?
How
Much Insurance is Enough - Home
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.
Deciding How Much Insurance is Enough
We'll work with you to estimate the replacement cost for your home and
to adjust your policy limits from time to time as needed.
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.
Be Sure You Have Enough Insurance
Here are some steps you can take to reduce the danger of being
seriously underinsured:
- 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
coverage. 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
coverage, 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.
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