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Storm warnings should set off insurance bells

Mother Nature’s recent tantrum on New Year’s Eve caused quite a bit of damage around town. The area around our Sunset Hills branch was hit hard, with some homes flattened right across the street. All this destruction should have you asking yourself one question: “If my home was destroyed, do I have enough insurance to cover the cost of rebuilding?”

With today’s busy schedules, chances are the issue of our insurance coverage isn’t the first thing we think upon waking up every day. It’s easy to push it to the back burner … until we need it. But as painful and/or boring as the subject may be, the time to think about insurance isn’t when you need it. You need to sit down and make sure that if the time ever comes, your coverage is adequate for your needs.

When thinking of your homeowner’s insurance, there are three things that make a nearly perfect policy: good price, reasonable deductible, adequate coverage. But before you can reach such an insurance nirvana, you must first understand the terms of your homeowner’s insurance. What exactly will happen if a disaster strikes? Does your policy protect your home as well as it can?

To have an effective homeowner’s policy, you should update it regularly to ensure you’re covered adequately. Here are just two things that can lead to the need for a policy review:

  • Remodel, renovate, addition(s). Have you updated your kitchen? Added a room? Remodeled the basement? Before you did any of that, your home was insured for its worth. Now that you’ve made improvements, your home is likely worth more; hence you need more insurance to adequately cover the increased worth. Contact an appraiser to pinpoint how much your home is now worth. Forward this information to your insurance agent so he/she can adjust your policy.
  • Market position. The recent meltdown in housing trends should teach us that housing prices can change in the blink of an eye. Even worse, you have little or no control over it. As an example, let’s say a new grocery store goes in right behind your home. The ensuing traffic and noise are likely to decrease the value of your home. But if that same store goes in just a couple blocks away, the value could increase because you are now “conveniently located” to a necessity. As your home’s value fluctuates, so should your level of coverage.

To play it safe, schedule a yearly policy review with your agent so you can discuss any changes to your home as well as its value.

If you’re shopping for a new policy, make note of three things: price, the company’s financial stability and claims reputation. Call three or four companies to get a fix on a price. Your price can be lowered if you’re prepared to raise your deductible.

FYI-homeowner insurance policies don’t automatically come with earthquake coverage. With the New Madrid fault centered just down Highway 55, and experts saying another major earthquake like the devastating quake of 1811 could hit our area at any time, you’d be smart to include earthquake coverage in your policy.

Did You Know?
A report by Marshall and Swift/Boeckh* found that nearly 6 in 10 homes are underinsured by an average of 21 percent.

*Marshall and Swift/Boeckh Replacement Building Cost Data, 2008