Insurance Part 1: Home

Insurance 
Part 1: Home

By Keith Bunn Jr.

August 5, 2012

As I said on my Facebook page, I don't feel I explained the different kinds of insurances that are out there well enough. So this week will start the beginning of an insurance series where I will take certain insurances and go into more detail on them. Now, I’m not trying to sell you insurance, I don’t even have a license to sell insurance. I’m just trying to pass on what I have learned about it, and one of the things is that it can be incredibly frustrating dealing with insurance. What’s good, what’s bad, who should be covered, who should not, or do I have enough. Any of those questions sound familiar? The sad thing is, a lot of us don’t get the answers to those questions until it’s too late. So it is my hopes that going over these things will shed some light on what you have or need so you and your family are covered properly.

Homeowners Insurance

As I said in the last blog, Insurance is to cover the risks that we can’t take on in case of something happens to ourselves, our family, or property. And home ownership is no exception. Now as we all know, if you have a mortgage, a lender can make it mandatory that you have homeowners insurance to cover any loss or damage that may happen due to fire, earthquake, flood, etc… but did you know it is your responsibility to make sure that you have enough coverage and the right coverage on your home? It is not the insurance companies or the mortgage/bank’s responsibility.  So here are a few things you should probable look into.

·         Guaranteed replacement insurance: Most insurance companies today, especially the major ones have a policy that covers your home to a certain dollar amount and then say “+ $25,000”. That is not guaranteed replacement. To give you an example: let’s say when you first bought your home it was worth $150,000. and your insurance policy reflects that you are covered at $150,000 +25,000. Now as time goes by your home increases in value (we hope) to $225,000 and you have a fire that burns your home down to the ground. The insurance company will only give you a check to rebuild your home for a $175,000 ($150,000 + $25,000). That leaves you on the hook for another $25,000 to rebuild your home. To make sure this doesn’t happen, you would have to get your home appraised and adjust your insurance at least once a year. Using the same example, if you had guaranteed replacement, it doesn’t matter how much your home increases in value, the insurance company will pay to replace your home, period. Now I have to tell you, it is not easy to find an insurance company that offers Guaranteed Replacement Insurance but they’re out there, you just have to look for them.

·         Renters Insurance: It is my opinion that renters need to get renters insurance. For the simple fact that if something were to happen to the apartment or house you’re renting, your personal items are covered. Your landlord’s insurance company is not responsible for your personal items.

·         Flood insurance: If you live in an area that could possibly be in a flood zone. You probably should get flood insurance. I know that sound like a no brainer but how many stories have we heard about the people who lost their homes after hurricane Katrina went through New Orleans. And what about the 500 year flood that went through Nashville a couple of years ago. And just for your information, if your home is covered for hurricane and storm damage, that doesn’t mean it is covered for flood damage. Double check your policy to be sure.  

 Questions

1.    Is your home properly covered?

2.    Do you have Guaranteed Replacement Insurance?

3.    Do you have renters insurance?

4.    Are you covered for floods?

I hope my posts inspire you to look at what you’re doing financially and if needed, make some changes that will cause you to win financially. I also look forward to reading your views on any articles or postings that I may post. For more money news, facts and ideas, follow me on Facebook, or Twitter. Thanks you!