If you took a set-it-and-forget-it approach to your homeowner’s insurance, consider getting reacquainted.
In addition to replacement and repairs, you need to think about what you own inside of that dwelling, about liability if someone is injured on your property, and how you’d pay for things like hotels and restaurants if you need to stay elsewhere for awhile. And of course, every insurance has its exclusions. Do you know what’s NOT covered in your policy?
Here are some things you should review, whether on an existing or new policy:
- Replacement coverage. Stay updated on how much it would cost to rebuild–an independent insurance agent can help. Renovations can affect the value, and you need to be aware of building code requirements that might not apply to your existing place. Ask about guaranteed replacement coverage, which covers the cost regardless of spikes in labor or materials.
- Personal property coverage. Personal property includes everything from clothing and furniture to electronics and even the food in your fridge and freezer. Take an inventory of everything you own, including photos of pricier items in particular. Check whether your policy covers the cost to buy new items or whether you’d receive actual cash value, which would take depreciation into consideration. You might also need an additional policy for expensive items like furs or jewelry.
- Liability insurance. Most policies have a minimum coverage of $100,000 but you probably want three to five times that. Forbes recommends having enough to cover all of your assets, i.e. the house plus car and money in the bank, etc.
- Additional Living Expenses (ALE) or Loss of Use coverage. Covers the cost of hotels and restaurants if you can’t live at home.
Policy exclusions usually include things like floods, earthquakes, windstorms, nuclear hazards, etc. You’ll need separate coverage for those. Also consider home business coverage and identity theft coverage, among others.