One of the biggest mistakes consumers make with their homeowners insurance policies is the failure to conduct an annual review of the contents of the residence. This is especially important in January after the Christmas gift-giving season. If expensive new items are not added to the home inventory, they might not be covered from damage or loss.
Typical Policies Offer Minimal Protection for “Luxury” Items
A typical homeowners policy will cover about $2,500 in losses for personal electronics including computers. While that might have been more than adequate in the days when there was one TV in the house that just picked up 3 channels, it would hardly make a dent in replacing the kind of gadgetry with which the modern home is equipped.
Most homeowners do not understand that to be adequately protected on their policies, they will likely need riders or “mini” policies that add clauses to and thus extend the basic coverage outlined in the policy. The need for riders doesn’t just extend to electronic equipment, but really to any “luxury” item in the house.
For instance, if you own particularly valuable jewelry, you should have the piece or pieces appraised and a rider added to your policy. Also consider adding art objects, antiques, and valuable decorative pieces like oriental carpets.
Adequately Insuring a Home Office is Essential
More and more people are working from their homes, enjoying the benefits of fully equipped home offices. You should inventory all your equipment, and, depending on the nature of your business, discuss the need for additional liability coverage with your insurance professional.
January is a particularly good time to review the items you have listed on your home insurance riders, since you not only will have received gifts, but may well have treated yourself to a new piece of office or gaming equipment.
People who do not review their homeowners policies may find that they have continued to list an item they have not owned in years, while failing to add a newer and more valuable piece. Unfortunately, these things generally come to light when a catastrophe has occurred. Insurance benefits are needed, but may not be forthcoming due to the oversight.
Separate Wind and Flood Policies are Now More Common
At the same time that you are reviewing the contents listed on the policy, also go over the provisions covering structural damage to the home. Over the past five years, we have seen the effect of changing weather patterns on various regions of the U.S.
In 2011, for instance, a hurricane traveled far up the east coast of the United States subjecting communities to flooding and wind damage where neither had ever been a problem before. Basic homeowners policies do not typically provide coverage for flooding and wind-related events. Separate, disaster-specific policies are required.
A homeowners policy is only as good as the attention that is paid to it. Allowing the policy to sit unattended is a costly mistake in an age where the entertainment and communication devices we use on a daily basis alone are more expensive than our grandparents ever could have imagined. A half-hour review of your homeowner’s policy is a small price to pay for knowing your home and its contents are adequately protected.
