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Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
Everyone should have homeowners insurance, which usually covers everything you keep inside of your home. Does Your Homeowners Policy Adequately Cover Your Personal Property? By Britt Erica Tunick It goes without saying that you should have insurance on your home, and if you have a mortgage your bank will require you to have it. Don’t forget that your home includes everything you keep within it –from furnishings, to electronics, clothing, jewelry and pretty much any other personal property you own. While most homeowner’s insurance policies include coverage for personal property, in most cases the value of your personal property will far exceed the coverage included in your homeowner policy should your home be hit by burglars or any major disaster. Let’s face it, while a homeowner’s policy for a million dollars or more sounds impressive, when you actually break down the cost of major repairs, or rebuilding a home in the worst-case scenario, and then start adding up the cost of replacing everything you keep within your home, the amount of money your insurance policy covers you for will almost certainly seem much less impressive. Keep in mind that just because an insurance policy may cover you for a certain amount, that doesn’t mean your insurer will automatically pay that amount if you need to file a claim. Like it or not, you will never be reimbursed in full for that 60-inch plasma TV you spent a couple thousand dollars on –no matter how new it was. That’s because, much in the same way that the value of a car depreciates the second you drive it off the dealer’s lot, insurance companies also factor in depreciation when determining the value of any personal property for which you submit a claim. Then there’s the simple fact that your insurer may not agree with your opinion of an item’s value, much less what you may have paid for it. If you haven’t documented the value of high net worth items in advance, it will be almost impossible to get an insurer to reimburse you the full value of an item, as most homeowners insurance policies contain hard limits on what they will reimburse for any one item. Given these realities, it is important to take the time to dig into what your homeowner’s policy does and does not cover and spend some time determining how much coverage you really need. If you find that your personal property coverage is inadequate you can bolster it by taking out enhancement insurance, whether through blanket coverage for specific types of possessions such as jewelry or electronics, or by insuring specific items through dedicated insurance policies known as floaters –the more expensive option of the two. Taking the time to determine if you need additional coverage and what type is best for you may be inconvenient, but it will be well worth it if you ever find yourself faced with a disaster. |
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