Odds are that as you were putting up holiday decorations or enjoying a winter wonderland, you probably didn’t think of every single risk that came along with inviting friends and family over for a New Year’s gathering, decking the halls (and the walls, and the lawn, and wherever else you wanted to spread Christmas cheer) or baking Christmas cookies.
However, when it comes to your home, there are always risks attached to anything you do. Unfortunately, if you sat and thought about it for awhile, you would become aware of all the different things that could happen not only during the holidays, but all year long in general.
In addition to your other goals for 2012, make a resolution that this will be the year you get the ultimate insurance coverage regardless of whether you own your home or rent it, and make it the year that you truly understand what kind of protection you have…or don’t have. Once you reach this time next year, you’ll know what to do if Grandma gets run over by the mechanical reindeer in your front yard. Here are five resolutions to make in 2012 for your homeowners or renters insurance.
- PURCHASE insurance if you don’t have it!
For many, this may seem like a no brainer, but the truth is, there are a lot of people out there who don’t have coverage for their home, especially those who rent their home.
Renters may wonder why they need insurance if they don’t own their home, and many assume that the owner’s insurance will cover their possessions inside the home. If you were to pick up the home you rent and shake out all the belongings, anything that falls out is likely your personal property, and you need coverage for this. For example, if a fire completely destroyed the home and all of your belongings inside, and you didn’t have renters insurance, replacing the home would be covered by the homeowner’s insurance, but your personal property (such as furniture, clothing, etc.) wouldn’t be covered.
Even if you rent an apartment or condo, you need renters insurance to cover your possessions and to have liability protection. Why the liability coverage? Consider this: if you live in an apartment building and cause a fire that burns down the whole complex, all of the other renters can come after YOU to replace what they lost: this can add up quickly, and you could end up working the rest of your life just to pay off your past neighbor’s losses.
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Read your policy and know what coverage you have
While you’re finishing playing catch-up on all the books on Oprah’s 2011 Book Club list, pull out your homeowners or renters insurance policy and carefully read it…every word. If you come across something you don’t understand, ask your agent about it and conduct your own research to make sure you truly understand what everything in the policy means. Failure to understand something in the policy could end up being a major expense for you in the future. By law, certain words that qualify as insurance jargon are going to be in the policy, but due to new regulations and laws, insurance policies are generally easier to read than they were a few years ago.
It’s just as important to understand your insurance policy as it is to know what you have coverage for. Before you sit down to review your policy, think about different scenarios that you want to have protection for: fire, theft, vandalism, wind damage, flood? This will help guide you through your policy and help you determine if you feel comfortable with the amounts of coverage you have. Specifically, it’s helpful to ask your agent what your policy DOESN’T cover. For example, did you know that your homeowners insurance policy will not cover natural floods? In order to have coverage for flood damage, you need to purchase a separate flood policy from the National Flood Insurance Program. Rather than just obtaining coverage and insurance limits that you’ve always had or ones that seem like ‘safe’ choices, consider what the real costs could be if you experienced a loss and what ones you likely need protection for.
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Ask about discounts
If you’ve reviewed your policy and found you’re not adequately protected, or if you’re purchasing insurance for the first time, then you may see an increase in your premium or have an added expense. However, there are ways you can save money regardless of an increase or additional expense.
Whether you’ve got renters insurance or homeowners insurance, combining all of your insurance policies with the same carrier can offer you savings. For example, the average renters insurance premium is only about $15 a month, and you can often get a multi-policy discount if you get renters insurance from the same place you have your autos insured. So often, what an insured saves on their auto insurance with this discount ends up covering the cost of renters insurance. If you own your home and purchase homeowners insurance from the same carrier you have auto insurance through, you can usually get this discount as well.
Ask what discounts your insurer offers, and write them down for future reference as well. You may have become eligible for a discount that you weren’t eligible for a year ago, and odds are, if you don’t call attention to it, the insurance company won’t know to give you the discount. Review the list of discounts available from time to time to make sure you haven’t become eligible for one. Most discounts can save you anywhere from 3% to 10% on average, and if you get a few discounts, that’s considerable savings.
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Take an inventory
Take a look around you. If you lost every single thing you own in a fire, down to your toothbrush, how much do you think it would cost to replace everything? It’s easy to acquire possessions without realizing how one little thing on top of another can add up. Even if you think you don’t own anything of value and have purchased everything you own at a thrift store or yard sale, that’s still money you’ve invested into your belongings, and suddenly having to replace everything you own can be quite expensive. Replacing the personal property of the average single person living in a one bedroom apartment usually costs about $20,000. Now imagine if you have a family, or if you’re a collector of antiques, art, musical equipment, jewelry, or electronics. The costs of replacing everything would triple if not quadruple.
Therefore, taking a thorough inventory of every possession in your home could end up being priceless if something was to happen and you lost everything. Make a list of everything you own, and then write what you think it would cost to replace each item. Add the prices up and that’s the amount you should be asking for when choosing a personal property amount.
In addition to making sure you have enough coverage, you’ll also want to take an inventory because if something unfortunate did happen, how well do you think you’d be able to recall every single item in your house, especially in a time of distress? Write down an inventory and also consider walking room to room and video-taping all of your possessions so you have a video inventory as well.
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Do some comparison shopping
Everyone is looking to save some money, and if you don’t shop around for insurance quotes occasionally, you could end up missing a chance to save a lot. It used to be a chore to get several insurance quotes, but now you can easily get multiple quotes due to the convenience of the internet. On InsuranceQuotes.org for example, you can put in your information once and quickly have several quotes to compare within minutes.
Consider getting two quotes as well: get one quote with exactly the same limits and coverage you currently have, and get a second one with some higher limits. Sometimes you can get more coverage for just a couple dollars more, and you won’t know if you don’t ask.
In addition to comparing prices, compare what you’re getting for the price also. Some companies may offer something that another doesn’t which you may find very valuable: for example, some companies offer Equipment Breakdown coverage that covers things like hot water heaters, but some companies don’t. Review each quote line by line, side by side, to see what one company offers versus another. You may be able to get a policy for $20 less than another, but if you’re sacrificing an important type of coverage, then you could end up paying way more in the future.
Having coverage for your home and possessions is something invaluable when you consider what it would cost to replace everything. You’ll be able to rest easier on a bed that’s insured than one that’s not, and feeling confident that your assets are protected is a feeling you can’t put a price on.
– Desiree Baughman, insurancequotes.org
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