Moving to a new home typically brings great excitement to a family and it should. There are few life events that carry the impact of adapting an established lifestyle to new accommodations and new surroundings. It is a time of great discovery for all of you and especially for your children; this is where and how dreams are made and memories are formed. For adults, that discovery is tempered with the necessities of protecting that investment and preserving your family’s dreams. Even as you are unpacking your things and settling in, thoughts need to begin about the whole of your insurance needs.
The purchase of a home involves more than just considerations about Homeowners Insurance coverage. Here are some types of insurance that need to be reviewed and adapted to the needs of your recent move:
Homeowners Insurance
Insurance to protect this most sizable of assets is a must. The simple act of procuring a mortgage on your new home carries with it the necessity of purchasing adequate Homeowners Insurance; the mortgage company typically mandates it, as their stake in the property is as true as is yours. While this is typically a tough time to lay out more cash and accept additional financial obligations, you need to make sure that the amount of coverage that you procure will adequately protect you for all possible losses, and you need to do it immediately; unforeseen circumstances can come at any time and cause significant damage and loss from which it would be very tough to recover.
It all starts with procuring adequate “replacement cost” coverage on your property, and to ensure that damage or loss caused by calamities such as earthquakes, storms, wind and natural and man-made disasters of many kinds is covered. In the insurance industry, “replacement cost” is the computed value of an insured item. It is not tied to “market value”, but is instead the cost to replace an item or the structure itself at its pre-loss condition. A proper assessment of replacement costs will be suggested by your insurance company and you should feel comfortable that it will be adequate for your needs from the start.
In addition to purchasing enough Homeowners Insurance to cover the replacement costs of the home itself and the land on which it sits, Homeowners policies will also include coverage, with limits, for specific items (e.g. furniture, paintings, jewelry, etc.). If your possessions are of greater value to you than what is offered in the basic policy, you should consider purchasing a separate policy (a “floater” policy), in order to increase that coverage.
One more thing, don’t forget that the amount of replacement cost coverage you have is the amount that your insurer would have to pay, at the present time, to replace any one of its assets. Thus, it makes sense to conduct periodic reviews of the assessed value of your structure and personal possessions of value.
Flood Insurance
One common misconception for home owners is that their Homeowners insurance covers their home and personal possessions for flood damage. Also, it is commonly believed that only people living near rivers, streams or oceans warrant flood protection. The reality is that any residence in a low-lying area is subject to flooding at some point and, for peace of mind, those home owners need to consider purchasing Flood Insurance. Most companies that sell Homeowners Insurance also sell Flood Insurance, and discounts are typically available with the purchase of two or more lines of coverage.
Health Insurance and Disability Insurance
Typically, when thoughts turn to how to properly insure one’s home, considerations are often centered on damage caused by fire, theft, vandalism, storms, earthquakes, etc. It is a natural progression to think how you and your family will recover from damages such as these and Homeowners Insurance is specifically tailored to afford you such protection. However, there is another side to home ownership that has nothing to do with your home suffering structural damage or the loss of valuable possessions and that is how to best protect your ability to remain in the home, even in the face of unforeseen personal injury. The question for all homeowners is, how will you make your monthly mortgage and utility payments if you were unable to work due to an accident or illness? A Health Insurance policy with an endorsement for Disability Insurance will cover medical costs and pay you a monthly benefit to replace a portion of your income until you are able to work again. Many employers provide health & disability insurance for their employees. However, if your employer does not offer it or if you are self-employed, you should discuss with your local insurance provider how and where you can purchase an individual Health & Disability Insurance policy. Again, to preserve the lifestyle you worked so hard to give your family, a full range of protection is necessary.
Life insurance
Likewise, what if you were to die before your mortgage was paid off? How would your family be able to keep up with the remaining mortgage payments and remain in their family home? If at all possible, the tragic loss of life should never be exacerbated by the need to have your surviving family members uprooted and forced from the house and neighborhood it calls home, because it can no longer afford to remain. Life Insurance can provide your family with the funds to pay off their mortgage debt, and enable them to remain in their home relatively debt free. While many employers offer some level of life insurance coverage to their employees, the amount of company-provided coverage is typically not enough to preserve the home and provide financial security to your family. It is definitely a good idea to consult an insurance professional to help you assess your family’s life insurance needs.
Auto insurance
Finally, a home owner should positively understand the relationship between home ownership and being adequately protected for damages, injuries and death potentially caused through the use of one’s automobile. In the event of an auto accident caused by your negligence or impairment of any kind, all of your assets (including your home) could be subject to claims if the claim amounts exceed the liability limits of your auto insurance policy. It is a very good idea to assess the existing liability limits on your auto insurance policy and ensure that you have adequate coverage to protect your home. It is a good idea (and relatively inexpensive) to consider procuring a separate liability policy that would provide additional protections and which would specifically pay for damages that exceed the coverage limits on your auto and/or homeowners insurance policy.
By: Lenny Diwilliams About the Author:
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