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Are You Over or Under Insured?

A talk by soniacondurache

About the Talk

March 16, 2015 11:00 PM

Jakarta, Indonesia - Choosing the right insurance coverage isn’t easy. If you are under-insured, you could be left with unpaid claims. Sometimes, it doesn’t make sense to insure the contents of your home for much less than they are worth, you could be paying for more coverage types than you need. The key is in knowing what’s covered and what’s not. Account for any recent remodels and look to see if your current coverage keeps pace with inflation. Axis Capital, a group of insurers and reinsurers with the main location in Bermuda and with international branch in UK, US, Singapore and Australia has listed some steps for you to know if you are under or over insured.

What you need is coverage that’s just right. Here’s how to get it, and it shouldn’t take more than 4 or 5 hours of your time spent reviewing your homeowner’s insurance policy, talking to your agent, and doing a little research.

Step 1 Pull out your policy before the annual renewal date. Check for coverage limits, exclusions and restrictions. Always remember that all homeowners insurance isn’t created equal. That’s why it pays to review your coverage every year to ensure your policy meets your evolving needs. Begin by understanding the types of coverage available.

Step 2 Estimate the value of your home’s contents. Unless you do a complete inventory of your household furnishings and personal possessions, the things you own could be worth a lot more than you think. Replacement cost coverage is more expensive but usually insures your personal property for what it costs to buy new.

Step 3 If you have recently remodeled your house, you should increase your coverage. It is a general rule of thumb to increase coverage once you have completely remodeled project that cost more than at least 5% of your home’s value.

Step 4 Contact legit homebuilders in your area to get quotes on the cost of new construction. This will help you figure out how much insurance you need to buy to cover the total cost of rebuilding your home. Just make sure that you do not get a fraud contractor.

Step 5 Insure your home for what it would cost to rebuild it. If you only take out enough insurance to cover what you paid for it, you could find yourself in big trouble financially should something happen. It will cost you a few dollars more in premiums but each year the amount of insurance you have on your home automatically increases.

Step 6 Buy additional coverage if you live in an area at high risk for natural disasters like hurricanes, earthquakes or floods. Losses due to these types of disasters aren’t covered by standard homeowners insurance, so you need separate policies.

Step 7 Consider buying replacement cost coverage for family heirlooms or other valuable stuff that would be really expensive to replace. Most policies only provide actual cash value on a home’s contents and then limit the coverage.

Step 8 Buy as much personal liability coverage as you can afford. While it’s hard to figure how much liability coverage you’ll need if someone sues you, start by calculating your net worth. Without adequate coverage, you’ll be forced to sell some of what you own if your policy limits won’t be enough to cover damages if you’re sued.

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