Protecting Your Assets with Property Insurance
As long as you live ... "It's
always something!" And in this case
"something" such as a fire, flood or
hurricane could destroy your home or
investment property when you least
Prevention is far better than cure so build the best you can, board up if a storm approaches, keep a fire extinguisher in your house for fires, and use common sense in storing flammable materials such as paint and gasoline. Also when you consider a location for building - be honest with yourself about the natural drawbacks of that location, and if it is dangerous, perhaps consider another spot. If you cannot consider another spot, don't invest money you cannot afford to lose, as nature will win in the end.
After doing those common sense things discussed above, and if your budget allows, buy property insurance. You can select from several good local insurance companies. Each has it's own set of charges and items for which you can be insured, so it makes sense to shop around. Some companies do not cover wood houses others do (same for thatch, etc.). For some reason, most companies don't let you read their policies before you pay for them - I have asked and asked, but that is just the way they do it. Some of the local agents are quite knowledgeable and can tell you most of the details about the coverage, but in the end you are the one who should read and approve of the items you buy - so try to locate a standard copy of a policy by asking a friend who is insured, and read it through. If that doesn't work, most companies have a custom whereby they will refund your money if you don't like the policy after it is issued and you have received your own copy. Don't let this little quirk stop you from buying insurance.
Generally you begin with a standard "Fire Insurance" policy and to that policy you add special "riders" that cover other events. You can be insured for many things you may never have thought about. "All Perils" riders include some or all of the following potential disasters: Hurricane, Flood, Riot and Strike, Malicious Acts, Airplane Impact, Explosions and Volcanic Eruptions. None of them cover acts of war, or intentional acts of destruction by the property owner or insured party themselves (so DO NOT set your house on fire just because you want money for a new one ... ).
Each company has a slightly different way of structuring coverage and payments, but in concept these methods are quite similar. Basically, there is a "deductible" amount per occurrence, and then a percentage of the insured amount that is paid to the policy holder depending on actual levels of damage. Some people have no insurance at all and there are others who buy too much coverage.
Buying too much coverage results
when you 'include the total value of
your home, including things that have
little potential of being destroyed -
such as concrete underground foundations. Assess your own home or
building and buy coverage adequate
to replace the part of the property that
is actually vulnerable to destruction.
You can also buy insurance to cover
the potential loss and damage of your
"personal items", such as your
refrigerator, stove, tools, computer
and t.v. This is called "contents"
insurance and can be issued separately to people who rent an
apartment or house, or can be added to
the master policy for a property you
own. When you decide on that
coverage, first go through the house
and list each item you wish to insure,
except for art and jewelry which
require separate appraisals and policies. Then put a replacement cost next
to it, and take a good look at the item
- ask yourself if the item is old and
worn out. If it is, the insurance
company isn't going to give you
enough money for a brand new item to
replace it, so perhaps this item is best
left off your list. Once your list is
complete it will be attached to your
insurance policy. You should also
take photographs of the listed items,
and include a copy of the photos in
that "safekeeping" package reviewed
in last week's column. Send the
negatives to your friend who is
keeping copies of your important
papers and have that friend put the
negatives with your insurance papers.
Review your insurance policies annually, and see if you need to change any of the items covered. If you do need to do some updating, be sure to do it BEFORE hurricane season. Note on a calendar when your next payment is due, so you keep current and covered.
Last but not least plan ahead. If
a storm is headed your way the
insurance companies will NOT sell
you last minute policies. Planning
ahead is always the best "insurance"
........ whether for insuring your home,
or for many other things in life. So
think about it and as always, if
you have a question. just ask. Next
week have you done all you can
to secure your home???
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