Customize Your Insurance – Part IV

Unlike auto insurance, it is important to make sure that your home insurance is always kept up-to-date. If you haven’t updated your home insurance policy lately, you could be headed for some serious problems if something were to happen. Unlike cars, the value of homes has been rising and will continue to do so. This means if your home insurance is up to date with the current financial trends, than neither is your coverage.

What most people don’t think about it the amount they need the insurance to cover. You need to cover the cost it would replace you to rebuild your home, not your current home’s value. Say you bought a home 5 years ago and its value was $500k. Your insurance was most likely for $500k. But now with rising costs, 5 years later it would cost you $750k to rebuild your home in the event of destruction. Your insurance policy is not going to cover that $750k you need, rather they will just cover the $500k which you are insured for.

Think you don’t need insurance if you rent? Wrong. Renters too need insurance, obviously not for the property of the building which they live in, rather for the personal items which the own inside of the building. When looking for a renters policy make sure to get actual replacement cost coverage. This way your policy pays you what it will cost for you to replace all lost items, not the depreciated value of those items.

Regardless of whether you are looking for renter’s insurance or home owners insurance it is suggested that you ask the insurer to include an umbrella liability policy. This should cost you about $200 per year extra, but will give you up to $1 million in liability coverage should there ever be an accident or an injury on your property.

Customize Your Insurance – Part III

Auto insurance is probably the most well known and most feared type of insurance. Most state’s have low requirements for your insurance such as $30,000 of coverage for bodily injury, $50,000 total coverage for the accident and $20,000 coverage for property damage, including your vehicle. This is, in my opinion, not enough. What happens if you were to injure someone severely and they sued you? There is no way that low budget insurance plan will cover more than 10% of their lawsuit.

If the car you are looking to buy and insure is an expensive car, it is suggested you look into your policy’s “replacement cost” coverage. Most plans will only give you what they believe your car’s value was just before the accident, not what it will actually cost you to replace the car if you were to go out and get the same car again.

Looking at it from the opposite end, if your car is what many considered to be a “beater” or a “jalopy” you can easily save some money by dropping collision coverage. If the car is already in bad shape, will you mind driving around with a dented bumper? I didn’t think so. Save your money and drop the collision if the appearance isn’t so important to you.

As mentioned earlier in Part II, consider a policy which requires a higher deductible be paid in the even of an accident. Go for the $1000 deductible instead of the $500. This will result in a lower premium and save you money.