Years ago, the top half of a very large tree crashed down onto my dad's property, taking with it his new grill and a big chunk of the cement patio. This kind of thing happens to many of us when we least expect it -- a disaster, large or small.
These events can be minor irritants or major catastrophes. In my dad's case, he simply called his insurer, who advised him on how to proceed and explained what the company would pay.
Many people, though, don't have enough insurance on their home, their health, or other aspects of their lives. Here are three key questions to ask your home insurer, provided by the (admittedly not unbiased) Insurance Information Institute (III):
1. Do I have enough insurance to rebuild my home?
2. Do I have enough insurance to replace all of my possessions?
3. Do I have enough insurance to protect my assets?
Don't assume that your home's assessed value is its true value -- it probably isn't.
Many of us have improved our homes at some point in the past. (The III points to census data showing that homeowners have spent upward of $200 billion per year on additions, alterations, maintenance, and repairs.) But we haven't always told our insurers about it. Sure, your premiums may not be increased that way. But should you need to rebuild, you probably won't get as much money as you need.
Perform your own insurance checkup and have a frank discussion with your insurer about your home and coverage. Look into adding an "inflation guard" feature into your policy, too, to keep it updated with the cost of materials. If you're worried about damage from sewers or drains backing up into your home, you might want to add protection for this onto your policy. (And if you're suddenly worried about a tree falling on your patio, just ask how you're protected against that.)
Be prepared for losing your things by keeping good records of them and their costs. Decide (perhaps via a discussion with your agent) whether you want a cash value policy (which would pay to replace your losses according to their cash value less depreciation) or a replacement cost policy (which would pay you enough to replace them). Here are the six essential types of insurance you want to make sure you have.
Look into how much liability insurance you need. If you have considerable assets, you might want to get an excess liability or umbrella policy.
Learn much more about the not-always-exciting-but-still-critical topic of insurance in our Home & Real Estate area.
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