By: Richard Koreto
Published: December 10, 2010
The new year is a good time to take stock of your home owners insurance coverage.
1. Make sure you can rebuild all, not just part of, your house
Don’t make the mistake of assuming that just because your home’s value has gone down that the cost of materials and labor have gone down, too. For example, home construction costs rose 1.3% from January 2009 to January 2010, according to construction cost consultants Marshall and Swift/Boeckh, even while many homes were falling in value. Make sure your home owners insurance pays you for full rebuilding costs in the event of a disaster.
2. Check your flood insurance
The National Flood Insurance Program can help by making affordable flood insurance available, but there are limits to how much coverage you can get, and it isn’t available everywhere. In addition, the NFIP has only been approved for a series of short-term renewals. (That is, Congress has been extending its provisions for only short periods and has not committed to making it permanent.) Keep an eye on the NFIP to make sure the program remains in force.
If you can’t participate in NFIP or need more extensive coverage, see if you can buy flood insurance from your existing carrier. Flood insurance rarely comes with a standard home owners policy.
3. What’s new in your life?
If you’re recently divorced, and you got the house, make sure your ex-spouse’s name is off the policy. Did you build a playground for your children? Install a swimming pool? These may change your liability needs. Talk to your agent and compare your life status this year with last year’s to update your home owners insurance.
4. Maybe your valuables are worth more
Your art, jewelry, antiques, and other collectibles may have appreciated in value over the years. If your home owners insurance policy doesn’t have accurate values on these items, your company may not reimburse you for the full value in the event of fire or other home disaster.
5. Tally up any home improvements
Have you made any renovations or additions to the home, such as an expanded garage, new bathroom, or home theater in the basement? Your house may now be worth more and your home owners insurance needs to reflect that. Create a home inventory video and keep it in a safe place outside the home.
6. Give your trees the once-over
Hire an arborist to look at the trees on your property, and check with your home owners insurance agent to see if your policy covers you if one of your trees falls on the neighbor’s car. An arborist can tell you if your trees are healthy and advise whether they should be removed or trimmed.
7. Watch the nickels and dimes
Hunt for any special discounts that can reduce your home owners insurance premiums. For example, you may be eligible for a discount if you have an automobile or valuable articles policy with the same company has your home owners insurance policy.
These home features can also give you discounts on your home owners insurance–but only if your insurer knows you have them:
- Burglar or fire alarms
- Gated community patrol service
- Storm shutters
- Temperature monitoring system to protect against freezing, connected to a central station alarm
- Permanently installed, electrical back-up generator
Richard J. Koreto, a freelance writer, is the former editor of several professional financial magazines and the author of Run It Like a Business, a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, N.Y., and a country house in Martha’s Vineyard.