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.