Do you have enough homeowners insurance?
Most homeowners have homeowners insurance. The question is: do you have enough?
You want to have enough homeowners insurance to cover you if the worst happens -- if your house is damaged beyond repair and needs to be completely rebuilt.
The only way to know if you have enough coverage is to run the numbers every year, and to make sure you are basing those numbers on the right information.
With home prices in the toilet, it's easy to assume that you can save money by lowering the insurance coverage. Unfortunately, it doesn't work that way.
Replacement cost and market value are two different things. And the cost of building materials - lumber, copper, steel and concrete - have all gone up dramatically the last few years.
"If you don't have enough coverage and something happens to your house and it burns down and you don't have enough replacement coverage, you may not get as nice as or as big of a home as you had before the fire," said Angie Hicks, founder of Angie's List.
Experts say it's smart to review your insurance coverage each year before the policy renews. But most people don't do this. You want to be sure you could rebuild if the worst happens.
Angie's List recently polled its members and found that nearly one-third of those who responded hadn't checked their home insurance policies for two years or more. That can cause problems.
"It can lead to you not having the right coverage, not getting the best price you can, and neither of those are good outcomes," said Hicks.
Remember, this is your responsibility. Your insurance agent doesn't know if you've added a bedroom or remodeled the kitchen.
Make sure you don't buy too much insurance. Remember: you don't need to insure for the value of the land your house sits on.
The Insurance Information Institute says there are four elements that help you decide how much coverage to buy:
• the cost to rebuild the structure
• the cost to replace the contents
• additional living expenses if you have to move out during repairs
• your liability to others who might get hurt on your property
The coverage for contents and living expenses are linked to the replacement coverage on the house. As it goes up, they go up.
If you're looking to save money raise the deductible, don't cut back on coverage. The Insurance Information Institute says increasing the deductible from $500 to $1,000 could reduce premiums by up to 25 percent.
One more thing: it's important to have a home inventory to show to the insurance company if there is a loss. There's a free app and free software available to make this job a whole lot easier.
The free app MyHOME Scr.APP.book (available for iPhone and Android phones) from the National Association of Insurance Commissioners lets you quickly photograph, grab bar codes and serial numbers and store them digitally. There is also free software for your computer at knowyourstuff.org, a site run by the insurance industry.
More Information:
Insurance Information Institute: Homeowners and renters insurance
National Association of Insurance Commissioners: It pays to know your stuff
You want to have enough homeowners insurance to cover you if the worst happens -- if your house is damaged beyond repair and needs to be completely rebuilt.
The only way to know if you have enough coverage is to run the numbers every year, and to make sure you are basing those numbers on the right information.
With home prices in the toilet, it's easy to assume that you can save money by lowering the insurance coverage. Unfortunately, it doesn't work that way.
Replacement cost and market value are two different things. And the cost of building materials - lumber, copper, steel and concrete - have all gone up dramatically the last few years.
"If you don't have enough coverage and something happens to your house and it burns down and you don't have enough replacement coverage, you may not get as nice as or as big of a home as you had before the fire," said Angie Hicks, founder of Angie's List.
Experts say it's smart to review your insurance coverage each year before the policy renews. But most people don't do this. You want to be sure you could rebuild if the worst happens.
Angie's List recently polled its members and found that nearly one-third of those who responded hadn't checked their home insurance policies for two years or more. That can cause problems.
"It can lead to you not having the right coverage, not getting the best price you can, and neither of those are good outcomes," said Hicks.
Remember, this is your responsibility. Your insurance agent doesn't know if you've added a bedroom or remodeled the kitchen.
Make sure you don't buy too much insurance. Remember: you don't need to insure for the value of the land your house sits on.
The Insurance Information Institute says there are four elements that help you decide how much coverage to buy:
• the cost to rebuild the structure
• the cost to replace the contents
• additional living expenses if you have to move out during repairs
• your liability to others who might get hurt on your property
The coverage for contents and living expenses are linked to the replacement coverage on the house. As it goes up, they go up.
If you're looking to save money raise the deductible, don't cut back on coverage. The Insurance Information Institute says increasing the deductible from $500 to $1,000 could reduce premiums by up to 25 percent.
One more thing: it's important to have a home inventory to show to the insurance company if there is a loss. There's a free app and free software available to make this job a whole lot easier.
The free app MyHOME Scr.APP.book (available for iPhone and Android phones) from the National Association of Insurance Commissioners lets you quickly photograph, grab bar codes and serial numbers and store them digitally. There is also free software for your computer at knowyourstuff.org, a site run by the insurance industry.
More Information:
Insurance Information Institute: Homeowners and renters insurance
National Association of Insurance Commissioners: It pays to know your stuff
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