6 Common Home Insurance Mistakes Which You May Lose You Everything - By: Don Saunders

Getting hold of the right property insurance cover might not rank high on your list of financial priorities and, alongside things like investment decisions and estate planning issues, questions concerning the language in your homeowners insurance may seem barely worthy of consideration. However, the more successful you are, the more complicated your asset-protection needs are going to be—and the more you have to lose. Suppose, for example, that in addition to your primary residence—a historic home—you also own a house at the beach and a condo in the city.

For instance, let us say that your properties are in 3 states, the value of your collection of Expressionist paintings has grown apace and you recently volunteered to serve as a director of of a charitable organization. Virtually every aspect of this present situation could cost you dearly.

Insurance laws vary widely from state to state, different kinds of property require specialized coverage and collections of art and other unique items could prove hard to protect fully. Meanwhile, serving on the board of a non-profit organization might land you with additional personal liability.

Safeguarding yourself and your family might mean having to purchase extra coverage, although more insurance is not always the best answer. Instead, it’s vital to review your needs, consider specialized policies and coordinate your insurance coverage with other facets of your financial situation.

Here are 6 shortcoming which could turn out to be costly.

1. Leaving gaps in your homeowner's insurance coverage.

Homeowners need to review their cover regularly so that they can keep up with increasing replacement costs. However, insuring different kinds of property in different locales poses special challenges. If you buy insurance cover from more than one carrier you may face different limitations, rules, and plan renewal dates. For example, the liability limit on the plan covering a second home could fall short of the minimum on an excess liability policy designed to accompany the insurance cover on your primary home and you could well wind up being responsible for meeting the difference.

2. Dismissing your property's unique characteristics.

One of the advantages of of affluence is having the money to own grand homes but one of the problems is that These could be difficult to insure adequately. Normal homeowner's coverage won’t pay for the hard-to-find materials and craftsmanship required to rebuild that 19th century showplace you’ve painstakingly restored. Homes situated on the coast might face hurricane damage, while a house in the California mountains might be subject to earthquakes or wildfires.

3. Inadequate insurance for art and collectibles.

Standard homeowner's plans place a limit on cover for the loss of such things as furs, antiques, and other valuables. And while you could schedule additional cover, insuring the true value of an art collection will generally require a specialized plan which addresses several critical issues.

4. Omitting to arrange insurance for household employees.

When an individual works for you or your family as, for instance, a nanny, landscaper or personal assistant you could be liable for lost wages and medical expenses if the individual is hurt on the job. A number of states require household employers to contribute to a workers compensation fund while in other states this is optional. Nonetheless, providing such insurance might be required for ensuring your financial health.

5. Overlooking your liability as a board member.

Excess liability coverage could help protect you if you are sued as a director of a nonprofit's board or, for more comprehensive protection, you might want to consider special directors liability insurance.

6. Not getting frequent plan reviews and updates.

Your financial life isn’t static and neither are your needs for insurance. The value of your art collection might increase, extensive home renovations could mean a sharp rise in the value of your home and the re-titling of assets as part of your estate plan or as a result of the death of a family member, divorce, or the birth of a child might require changes to your plan. Even lacking any major events, you will undoubtedly need to undertake a comprehensive review of all your insurance cover at least every two years.

About the Author

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