Protect Your Investment

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Your home is your castle, which is why, while you won’t have to defend it against fire-breathing dragons, you do need to protect your house or condo from the likelihood of more typical home scenario disasters by buying the right home insurance coverage.

Take a moment to make sure you understand the different types of insurance, and then make sure your home is adequately protected.

 

  • The first thing to clarify is the difference between mortgage insurance, home insurance and life insurance. Mortgage insurance can cover the balance remaining on a mortgage if the person listed on the mortgage passes away or, in some cases, has a severe illness and is unable to support the payments. Home insurance covers the replacement cost of your home should it be damaged by fire or other disaster, and the replacement cost of your belongings in the case of damage or theft. Life insurance pays your beneficiaries a pre-determined amount in the case of your death. While an insurance professional will be able to give you details on all your insurance options, in a nutshell, mortgage insurance covers the loan, home insurance covers the homeowner’s property and possessions in the home, and life insurance protects your family.
  • In cases of theft, fire or water damage, standard home insurance can cover damage and loss of much of your contents, but not necessarily all. Talk to your insurance broker about any specific, valuable pieces of jewelry, artwork or even an expensive wine collection that might require a separate rider on your policy.
  • Find out about other instances where you may require additional coverage or a separate rider. For example, clarify coverage for water damage should it result from a natural disaster versus a backed-up sewer. If you live in an area prone to flooding or earthquakes you may be required to buy separate, specialized insurance to protect yourself against those types of claims. Homeowners with pools and hot tubs also need to consider dipping into their bank accounts to increase their liability insurance.
  • Your insurance broker will be able to explain how much insurance is enough, or even too much. For example, coverage is typically based on the cost to rebuild a damaged home, and is not based on the market value of the house.
  • Living in a condo? Yes, you need home insurance too. While your condominium building policy most likely covers all the common areas, it doesn’t cover your contents, personal liability and any improvements you may have made inside your unit. Also, if something like a fire or a leaky pipe in your unit damages another unit, you may be personally responsible for paying the damages. Don’t forget to ask if your contents coverage includes the items stored in your condo locker.
  • Running a home-based business? Don’t assume your business equipment is covered, and that business liability is the same as personal liability just because you’re working out of your home. Ask your insurance broker to add a business rider to your home insurance.
  • Are you renting out all or part of your property? The renter is responsible for insuring his/her own personal property, but you need to protect your property, your investment and yourself.

 

Talk to your insurance broker to find out what kinds of protection you need, how much home insurance is enough, how much is too much, and how raising your deductible can lower your payments while keeping your coverage strong.

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