Without a doubt the purchase of a new home can be an exciting time but...

Without a doubt the purchase of a new home can be an exciting time but unfortunately VERY stressful. There is so much on our to-do list, one of the last things we want to think about is insurance. For most, insurance is the boring part of our home buying adventure. However, with the understanding that if you're like most people, your home is one of the largest investments you will make in your lifetime, insurance is a vital necessity we must have in order to protect this precious asset. The biggest question now is, how much insurance do I need?

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Nationwide, 68% of homeowners are under insured, according to a survey published by Los Angeles based insurance services firm Marshall & Swift/Boeckh. Of this group of homeowners, they are under insured by an average of 18%. Risk analysis company, AIR Worldwide of Boston, estimates that the many upper income homes located right here in New England are under insured by 30 to 40 percent. Given the state of today's economy, this could prove to be financially devastating to ourselves as well as our families.

In 2007 the large Southern California counties of San Bernardino and Riverside we're ravaged by wildfires. Of the California homeowners that we're affected by these horrific fires, 75% of them we're found to be underinsured by an average of $240,000.

In 2005, Hurricane Katrina devastated home and business owners of New Orleans, Louisiana. Many victims of this tragedy said their insurance agents had told them they didn't need flood insurance when, clearly, they did. Courts had ruled that insurers didn't have to pay for damages caused by flooding as it wasn't a covered peril in the standard contract but an additional coverage that had to be purchased separately.

So as you can see, after a catastrophic loss such as a fire or natural disaster, one can discover an awful truth: they don't have enough insurance to rebuild their home. So how do we know how much to adequately insure our home for?

It's important to first understand the cost of rebuilding your home versus market value. Home market values reflect today's economic conditions, taxes and many other factors. Market value is also influenced by factors such as the location of your home, quality of the school systems and the desirability of your neighborhood. These factors are always fluctuating.

Reconstruction materials and the labor involved with rebuilding or reconstructing your home have very little to do with the situations that drive home market values. Reconstruction can be very pricey. As we all know, homes in Eastern Connecticut are unique and some vintage homes can be hundreds of years old. The cost to rebuild these unique homes to original specifications with similar materials and craftsmanship is generally more expensive than building a new home from scratch due to specialized labor costs and newer building codes. This ensures your home will be reconstructed according to code but still capture all the details of it's original vintage charm. If your home was built as a part of a housing development, these particular homes allow contractors to purchase lumber, electrical and plumbing supplies in bulk at discounted prices. These larger volumes make square footage costs much lower than building just one home at a time.

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That being said, in order to ensure that your home is properly and adequately insured, be sure to follow these important steps:

  • Choose your independent insurance agent wisely. Referrals and word of mouth always work best. Ask a trusted friend, family member, real estate agent or mortgage broker.
  • Provide your agent will ALL of the details about your home, such as: year built, square footage, materials used to build your home, details about your kitchen and bathrooms, special building or outbuilding features, any utility, roofing and heating updates, upgraded windows, hardwood floors or skylights etc.
  • Once you and your agent come to an agreement of adequate reconstruction value for your home don't forget to keep your coverage up to date. You should review your home policy with your agent at every renewal to ensure that you're always properly insured.
  • Be sure to notify your agent of any home changes or additions that you're planning or have already completed such as installing hardwood floors, adding a room, deck or patio, finishing a basement or remodeling a kitchen or bathroom. All of these changes can affect the replacement cost of your home.
  • Ask your agent about specific coverage's you should have such as earthquake, flood insurance, an umbrella or excess liability policy or scheduled valuable items coverage such as jewelry or fine art.
  • Remember that life changes such as marriage, divorce, a new baby, kids leaving for college or returning to the nest may require coverage changes as possessions also come and go.
  • Keep in mind that the cheapest insurance policy is not always the best. Make sure you ask your agent lots of questions about ALL of your coverage's and what those coverage's represent to you.
  • Ask your agent about the carrier he/she is booking you with. An educated agent should know their carriers financial strength, customer service and claims ranking in the industry. If they don't know, they should be able to provide it to you. If they're unable to or won'tfind another agent!
  • Whenever making a large purchase or completing a large remodel, video tape or photograph your belongings. This provides strong evidence of what may need to be replaced in the event of a catastrophic loss.
  • Finally, always keep your insurance policies in a safe place such as a fire protected safe or safe deposit box. Store it with an inventory and purchase receipts for your possessions.

Hopefully these tips will help you to understand that the time to make sure your Home is properly insured is now. It's all too easy during the chaos of life to put off adequately insuring your most precious investments. It's important to keep in mind that for as much as it may seem a tedious and daunting task, you must invest in your insurance coverage. Once a disaster strikes, it's already too late.

I do hope you enjoyed reading this. I should mention it had been asked for by Lyle from stone crafters. always value thoughts and comments.

Invaluable Assistance

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Posted in Moving and Relocating Post Date 10/08/2015


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