Considering the barrage of daily concerns, your homeowner's insurance policy may be the last thing on your mind. And yet, examining and reevaluating home insurance policies on an annual basis is a critical facet of homeownership, ensuring adequate coverage and protection for the most valuable asset and source of equity for many people in Virginia and beyond. Premiums, like much else in the current economic climate, are forecasted to see some big increases in the coming year, with some expected to exceed $1,000 a year and many slated for rate hikes in the double digits.
Coverage Parameters:
Coverage parameters are one of the reasons to take a closer look at your policy, particularly considering the increasing regularity of natural disasters throughout the country. Many policies don't automatically include coverage for earthquakes or floods, for instance, but few people realize they lack coverage until they file a claim and it's too late. Following are a few steps you can take to ensure that you have adequate coverage at an affordable price.
Coverage Amount:
When determining the amount of coverage you need, focus on the house itself. Obtain a current square foot replacement cost from your regional homebuilder's association (not your home's appraised value, as that includes land costs, which may be as much as 50 percent) and multiply your square footage by that number to determine your coverage need. If your area is prone to one or more natural disasters, it may prove cost-effective to pay a bit more to secure a guaranteed replacement policy and avoid inflated labor/material costs if such a disaster occurs.
Disaster Insurance:
Speaking of disasters, don't presume that you are covered. As aforementioned, many homeowners don't realize they lack coverage for specific calamities until it is too late. Read the fine print. Generally, most policies don't cover damage from flooding, earthquakes, or landslides. They also commonly exclude mold, broken pipes, sewage backups, and a host of other routine-maintenance-related susceptibilities. Adding a couple hundred dollars worth of coverage for specific problems such as these could save tens of thousands in damages over the long term.
Cost-Effective Packages:
Premiums will inevitably shift over time, but homeowners generally want to base their policy on the highest deductible they can afford to obtain the most competitively reasonable premium. Whether you have a flat rate deductible or one based on a percentage of the insured value, check your numbers annually to make sure you've obtained the most cost-effective package you can get based on your current income and coverage needs.
When you've secured the best possible policy, conduct a home inventory. Collect relevant documentation and store it, along with your insurance policy, in a fire-safe lockbox or in a secure cloud account. Keeping a digital copy of these materials can provide additional peace of mind in case of an emergency.
For your hom insurance questions, call or contact Wilson, Timmons & Wallerstein, Inc. today.