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Protecting your valuables: Tips for reviewing homeowner’s insurance policy
Don’t wait until a disaster hits to find out whether your homeowner’s insurance policy has got you covered.
According to the nonprofit Insurance Information Institute, there are four major events that should trigger a review of your policy.
- Policy renewal time. Review your coverage to ensure it is adequate enough to repair or replace your home, as well as adequately cover your personal belongings and liability. Most companies provide coverage for personal belongings of 50 to 70 percent of the amount of insurance you have on the home’s structure. Liability covers homeowners and the family members in that home in lawsuits for bodily injury or property damage. Limits usually start at $100,000 but some experts recommend at least $300,000 worth of protection.
- Major purchases, including home improvements. If you’ve renovated your kitchen or bath or enclosed a porch to make a new room, report those improvements so you’re not underinsured. And don’t forget about outside improvements, such as a new gazebo or tool shed or a hot tub. If you’ve bought a new computer, jewelry or acquired other major items, you’ll want to consider if you have enough insurance for those additions. Consider purchasing a special policy, called a floater or endorsement, to adequately cover items such as jewelry and other valuables. Floaters also cover losing an item.
- Safety improvements. If you’ve installed a new alarm system or upgraded heating, plumbing or electrical systems, ensure your company knows about this. Some offer discounts.
- Major lifestyle changes. The amount of items you have or want to cover can be impacted by divorce or having children move out or back in. If your dream job is working at home, make sure you’re covered for equipment and liability.
Experts recommend keeping receipts of major purchases with the rest of your insurance documentation, including an annual inventory of your possessions. The inventory should include a visual record, such as photographs or a video. Store the inventory in a safe deposit box and consider mailing a second one to an out-of-town friend or relative, experts say.