Homeowners Insurance - What It Does and Doesn't Cover...

Some homeowners mistakenly believe that a standard homeowner's policy provides more insurance protection than it actually does... that could mean large unexpected out of pocket expenses when one can least afford them.

The National Association of Insurance Commissioners (NAIC), an organization of state insurance regulators, found that 33% of U.S. heads of household still hold the false belief that flood damage is covered by a standard homeowners policy -- despite extensive post-Hurricane Katrina news coverage of scores of homeowners with claims turned down because they didn't have the required flood insurance from the National Flood Insurance Program.

Further that 24% of respondents indicated their policies insured their homes for the actual cash value, while 64% said their policies covered the replacement cost. Another 12% said they did not know which type of coverage, actual cash value or replacement cost, they purchased.

Actual cash value is the amount it would take to repair or replace damage to a home and its contents after depreciation. Replacement cost coverage, the better option, will cover the amount it would take to replace or rebuild a home or repair damages with materials of similar kind and quality, without deducting for depreciation.
NAIC's InsureUOnline website offers the following tips:

Add coverage as you enhance the value of your home, and acquire possessions, such as furniture, computers, stereos and televisions and other electronics. Be aware that computers and other high-end electronics may require special coverage. Notify your insurance company when making any major home improvements that cost $5,000 or more. Update your homeowners' insurance policy to reflect the new enhancements and prevent being underinsured.

In many states, you could be held liable for the actions of anyone who drinks in your home and then has an accident in your house or after leaving it.

An insurance policy should protect you against lawsuits due to these types of liability issues. Backyard items, such as a trampoline, pool, or hot tub may require you to increase your liability coverage through an umbrella policy. As you acquire more valuables such as jewelry, family heirlooms, antiques and art, consider purchasing an additional "rider" to your policy to cover these special items as they're seldom covered by a basic homeowners or renter's policy.

Lastly it is wise to make an inventory of all of your personal property, along with a photograph or video of each room. Save your receipts for major items and keep them in a safe place away from your house or apartment so you'll have them if you need to file a claim and substantiate value. 
 
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Thank you for your interest and the privilege of serving you!

With our highest regard,

Wayne and Lynda Gomillion
"The Pinehurst Home Team"

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