Although we are preoccupied with the Market, we also must be concerned with other risks!!

My fellow Americans, last week I wrote a brief article (The Gov. is NOT going to bail you out) regarding the simple steps you can take to protect your homes because as you are well aware, 30% of home values have gone down due to our economic crisis.

Although our minds are preoccupied with the level of uncertainty in the stock market that has our retirement money and investments sliding southward, we also must be concerned about managing other important risks, such as our homes.  Some key questions that we, as homeowners, should ask ourselves to prepare for the unanticipated are: (a) what happens "if" your biggest investment burns down? (b) do we have enough money saved to cover our deductible? (c) where can my family temporarily live in the event of the unexpected? (d) are my documents, receipts, pictures and/or video in order? After living through Hurricane Andrew, seeing what Hurricane Katrina did in Louisiana and Hurricane Ike did to Texas, now more than ever is when we should be ready - preparing for every step in the event of the unexpected. 

Just like every book has a beginning, a climax and an end, our preparation efforts must follow the same three steps.  Today, we are going to begin by defining the most important aspects of a homeowner's policy:

1.      Reviewing the Dwelling cost indicator.
2.      Reviewing the Personal Property cost.
3.      Reviewing the Loss of Use.
4.      What is the deductible in policy.

•    The Dwelling cost indicator is NOT the actual value of your home rather it's the amount it would cost your insurance agency to rebuild your home at today's cost.

•    Personal Property is the amount of money that the insurance company will pay out for your clothing, cooking articles, furniture, toys, etc.

•    Loss of Use is the sum of money that the insurance company will pay for you and your family to stay in a hotel while your home is being rebuilt your home from the ground up.  (This would be in the event of a fire, hurricane, tornado, flood, etc).

• By definition a deductible is the amount of money that as a homeowner you must first put down before the insurance company distributes any money towards the reconstruction of the home.

Please, stay tuned because my next article is going to cover recommendations as well as other details you should take into account like:

• Appraising your home and the impact it will have.
• 80% vs 100%
• The importance of inventory.
• The difference between deductibles and the financial impact it will have.