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Do You Have Enough Homeowners Insurance?

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1Exposed Gaps

Hurricanes have caused us to wonder about exposed gaps in our homeowners coverage. We all felt the pain a few years back when storms blew through this area; and we felt it even more when we tried to collect on damages through our homeowners insurance. A recent study showed almost 70% of homes in America are under insured. And to make matters worse: 30% of homeowners admit they have no idea how much their home is insured for. Most H-O policies carry traditional liability protection, but there are some situations where you might want to add more coverage to your policy.

2If You’re A High Income Earner

You might want to consider higher liability coverage with your homeowners insurance. Most policies cover you, up to 100 thousand dollars should someone get injured while on your property. But often, that’s not enough if you have an expensive home or pool. And the more money you make and have, the more you ought to have higher liability coverage. That’s just smart, financially. I mean, you could get another 1 million in liability coverage via an umbrella policy, for about 200 to 300 dollars a year. Smart. I recommend it, so talk to your insurance agent.

3Don’t Forget Other Things

Especially flood insurance because if you’re close to sea level. Don’t laugh. Those poor people in New Orleans were able to collect and rebuild, and a lot of it came from flood claims. Insurance company’s say a flood is rising water, not driving water. So hurricane-wind-water isn’t considered flood. The water actually has to rise from the ground and enter your home, and you have a claim. FEMA has FloodSmart.gov you can check out, and it will tell you whether your property is a designated flood zone area. On average, flood policies will run you about 400 to 600 bucks a year, additional to your home owners policy.

4If You Have A Lot Of Personal Items And Valuables

Such as jewelry or collectibles, pay attention. Typically, your homeowners will pay 50 to 75% of the value for contents inside your home. Stuff like your electronics, furniture or other items destroyed by a fire or other insurance disaster, like a hurricane I was talking about yesterday. But personal possessions like jewelry gets really tricky. You need to get your items appraised to get a true value of them. Recovering on your losses for family mementos is much harder. Most of the time, insurance is only going to pay for the appraised value of the item. So you might want to consider an add-on to your policy, called a rider, that will provide you additional jewelry or personal possession coverage. I’ve heard of quotes like, $150 per year for $15,000 of coverage, and so on.

5Employing People In Your Home

This presents insurance challenges you need to take into account. If you have a housekeeper or a nanny, you’re going to have issues with workers’ comp insurance. If one of these domestic workers gets injured, this form of policy pays their medical bills and lost earnings. Without it, you’ll have to come out of your own pocket to pay these people, as the state requires it. Again, state laws vary on this one, so if in doubt, make sure you check before you employ them in your home. Costs here vary widely. I’ve heard of figures for annual premiums to be 200 to 400 a year, per domestic employee to cover medial and lost wages related injuries. And don’t forget, if you’re paying worker’s comp on them, for tax purposes you have to put them on your books as employees.

I've been an investment strategist and adviser for over 35 years, leading with a mission of unbiased advice to educate and protect listeners on my weekly radio show on NPR affiliates nationwide. I have been named a “Top 100 Wealth Advisor” by Worth Magazine and “Top Advisor” by Reuters.