Homeowners insurance gaps you need to fill

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Homeowners insurance gaps you need to fill

Homeowners insurance is there in case of damage to your home or catastrophe, and can be a lifesaver if your home is destroyed by a weather event or fire. It’s important that you make sure you have no exposures or gaps in your homeowners coverage. Here are three common gaps that you should be aware of. Let’s make sure that you’re fully protected if the worst should happen.

The replacement value of your home

If your home is completely destroyed due to a natural disaster or fire, your homeowners insurance will pay to replace it up to the policy limits. If the limits of your policy are less than the replacement costs to rebuild, the difference will have to come out of your pocket. Obviously, this can be both a significant and unexpected expense.

The best and easiest way to make sure your home is adequately insured, is to talk to your insurance professional. Your agent will estimate the current cost of rebuilding your home so that you have the right replacement cost coverage for your homeowners insurance policy. An annual review is recommended. In addition, you should ask your insurance agent if your policy has an inflation guard clause.  This will automatically adjust your coverage each year to make sure that your homeowners insurance keeps up with the cost of rebuilding. This additional coverage is very affordable.

If you make improvements to your home, you should always contact your insurer immediately. Renovations, remodeling, and other improvements increase the value of a home and may mean a change in its market value. But, it will also affect a home’s reconstruction costs. The last step of any renovation project should always be to contact your insurance advisor and make sure your new investment is fully covered.

High Value Possessions

Your homeowners insurance policy will cover your personal belongings, things like furniture, electronics, clothes, appliances, etc. should they be destroyed or stolen. However, most policies have a separate, much lower limit for “high-value” items. These are things like jewelry, collectables, fine art, antiques, and even items you may have inherited… a silver tea service or silverware. The coverage for these types of items is typically set between $2500 and $5000. In some cases, your homeowners policy may not even offer coverage for the theft or damage to these items. Many policies pay out an actual cash value, which is the depreciated value of the item, instead of the replacement value.

Filling in this gap requires a separate endorsement or rider for high value items. Items will need to be appraised first, and then you can usually purchase a rider for roughly $15 per $1000 in coverage. This allows you to buy the coverage you need and is well worth the additional cost to protect these valuables.

Home office or business

Are you working from home on a routine basis, or even occasionally? It has become increasingly more practical to operate a home based business. Even brick and mortar businesses are often offering their employees the option to work remotely, at least part of the time. Nearly everyone with a home office thinks that their homeowners insurance will protect them in the event of a claim. Unfortunately, this is not only untrue, but the typical homeowners policy provides zero coverage for business related claims and could be leaving you with major gaps in your insurance coverage. Let’s take a look at just a few of the things that would not be covered by your homeowners insurance:

  • If you operate your home based business from a structure that is not attached to your home, such as a garage, barn, or outbuilding, your homeowners policy will most probably not cover your business at all.
  • If your inventory, stored in the garage is damaged by water or fire, your homeowners policy will not cover the loss.
  • If a deliveryman slips and falls on your front walk your homeowners policy’s liability coverage will not protect your business.
  • If you give advice in your business and you make a mistake that costs a client money, the lawsuit that could result will mean money out of your pocket to settle it or defend against it, unless you carry errors and omissions insurance that specifically covers your situation.
  • If you couldn’t operate your business out of your home, due to fire or other damage, business loss and additional expenses would not be covered under your homeowners policy.

If you have a home based business or are working remotely, your insurance requirements are unique and complex. Make sure you’re working with a knowledgeable professional agent who can structure an insurance plan that meets both your personal and business needs.

The insurance professionals at Foundation Insurance Group are ready to “fill in the gaps!” We are happy to review your current homeowners and business policies, ask the right questions, and make sure that both your personal and business insurance meets all your needs.

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