It seems annually recurring expenses come around sooner and sooner. This is partly due to aging and in part due to dread. Yet a proactive approach to these ritual expenses takes some of the sting out of their yearly return. Whether it is income tax, a health club membership, autumn landscaping bills or pool maintenance services, getting a jump on these obligations is good for both household budget and peace of mind. One of the most important of these chores is to review the property insurance policy. Conditions change year-over-year and homeowners must make sure coverage is sufficient.
Keep Track of the Term
The typical term length for homeowners or hazard insurance is one year. The last day of the term has a way of sneaking up on policy holders, so they are well-advised to employ the full range of hard copy and electronic reminders. Renewing the policy is the responsibility of the insured, not the insurer.
Is the Level of Coverage Still Applicable?
Homeowner's policies are not all created equal. More particularly, there are tiers of coverage depending on what an owner -- or the mortgage banker -- requires. While there are eight specific designations, they boil down to three levels:
1. Actual Cash Value -- which covers the property value and the belongings within after depreciation is factored in.
2. Replacement Cost -- is essentially actual cash value coverage without including depreciation. With replacement cost, the property can be restored to its original home value.
3. Guaranteed Replacement Cost/Value -- is also known as extended replacement cost. This is the most exhaustive coverage, and it serves as a hedge against inflation. In other words, it exceeds the policy limit, if necessary, to return the house to original value.
Policy holders facing renewal might want to upgrade in the midst of turbulent economic times.
Review Covered and Uncovered Events
A basic homeowner's policy will address damage -- exterior and interior damage -- to the structure caused by fires, hurricanes, vandalism and lightning strikes. For these types of devastation, an insurance company will indemnify the owner according to coverage level and home value. Yet there are episodes and occurrences that are beyond the scope of the hazard policy. These often include damage from flooding and earthquakes. Insurers might also refuse compensation if evidence points to neglect on the part of the owner. In addition, outbuildings like sheds and detached garages are frequently excluded from standard policies. If circumstances due to weather or property improvement have revealed a need for additional coverage, this can often be purchased in the form of riders, i.e., addenda to the policy that expand its breadth.
Look Over Liability Coverage
Every homeowner's policy contains provisions for liability -- i.e. the owner's responsibility for the injuries and suffering of others that happen on (and sometimes off) the property. Liability can go to pay medical expenses or wages lost due to enforced time off. It benefits owners who are reviewing their policies to determine whether the amount of liability coverage is adequate. The insurance company might default to $100,000 unless a property owner requests higher. Should a serious accident occur for which liability is assumed, expenses could soon exceed that $100,000 by far. Many companies offer an umbrella policy -- with a significantly higher premium -- that offers more comprehensive liability indemnity.
Keeping a term life or mortgage life insurance policy active can provide funds to pay off a property lien upon the death of the insured.