The most valuable and important tangible asset for most people is their home. It provides protection, comfort, and equity. It can also be our largest investment and expense. It is therefore critically important to make sure it is properly protected in the rare case of a loss.
Here are 5 ways to ensure proper protection in case of a devastating loss:
Review your insurance needs with your insurer or a trusted broker
When shopping for insurance, a broker or agent should review your needs and likely attend at your property to get a full appreciation of what is to be insured. Not all coverage options are the same; the lowest price is not always the best price. For example, a policy that only insures for actual cash value will only pay you the depreciated value of a loss. A policy that pays replacement cost will cover the cost to replace your property.
Jewelry and artwork may not be covered fully under most policies and an additional rider may need to be purchased. Tenant insurance costs very little – especially when bundled with other coverage by the same insurer – and can be tremendously valuable for these belongings.
Document and inventory your home and contents
Most people have no idea exactly what items they have in their home, when they bought an item, or how much they paid for it. After a loss, an insurer is going to request this information. There are many ways to inventory your possessions before a loss. Take photos or videos of your home and belongings with commentary. There are also many apps that can help in creating a photo library or inventory such as Encircle and Mystuff2. Keep receipts or invoices, and ensure the list is stored offsite.
Obtain a copy of the declarations pages and policy
Far too many people assume that they have proper coverage. Very few people actually review their coverage or the fine print. Ask for a copy of the declarations pages and the policy. Ask to review them with your insurer or broker. If you are not sure or have questions, ask them, don’t assume everything will work out.
Notify your insurer if there is a change in your situation
Insurance coverage can be denied if there has been a material change in risk to the property insured that the insurer is not aware of. Notify your insurer if something is changing or if you are not sure if they need to know. Send the information by email to document it. Some changes that an insurer may consider material include: increasing the number of tenants, major construction, vacancy, running a business from the home, changing the heat source. When in doubt, ask.
Take active steps to protect your home
A well-maintained home is less likely to be subjected to a loss. Inspect and maintain the furnace, roof, and areas where water may enter the home to prevent losses. Have working smoke and carbon monoxide alarms and sprinklers. Install an alarm system. Install backwater valves and backup sump pumps. An emergency generator can also reduce the risk of loss.
Should you be the victim of an insurance loss, it is important to take certain steps immediately. Document everything that happens. Take multiple photos of any damage (if safely possible), and include timestamps and details of the objects captured. Notify your insurance as quickly as possible. Obtain estimates in writing. It is your home and your duty to mitigate any damages, so if the insurer is stalling or refusing to pay, take steps to protect your home and limit the damage.