ISSUE #21
Homeowners Insurance

As we see on the news almost every day, you can lose your home to hurricanes, fires, floods and other disasters. Your home is one of your most valuable assets, and you need to protect it from severe damage and destruction. Even if you rent your home, your possessions are still at risk. Homeowners insurance is designed to cover such losses. Here are some pointers for thinking about your homeowners insurance.

1. Homeowners InsuranceBasics -- Homeowners insurance, which is usually required by your lender if you have a mortgage, provides three types of protection: 1) damage to your home, 2) damage to your personal property, and 3) personal liability. Your policy provides a maximum coverage amount, called the policy limit. Make sure your policy limit is sufficient to replace your home and its contents. The minimum amount of coverage required by your mortgage lender may not be enough.

2. Damage to Your Home -- Your policy provides protection against most basic causes of damage, called perils. These include fire, lightning, theft, vandalism, water leaks, hailstorms, etc. Your policy will also exclude some perils, such as earthquakes, floods, war, and intentional damage. Make sure you know exactly what your policy covers. A misunderstanding can be very costly. If you live in a flood or earthquake prone area, you will need separate policies for those perils.

3. Your Personal Property -- Your policy will cover your personal property, up to certain limits. Make sure you know your coverage limits. Take an inventory of your possessions to see if you have enough coverage. Your inventory will also simplify the process of filing a claim, as it may be difficult to document your losses if you lose your records. Many policies offer “off-premises” coverage to protect your personal property anywhere in the world.

4. Liability -- Your policy will also provide basic liability coverage for you, your family members and your pets. This covers injuries to visitors to your property as well as damage away from your home that you may have caused through negligence. Your basic liability coverage may be too low to provide adequate protection. You can increase your liability coverage with a supplemental umbrella policy that extends your coverage to a much higher limit.

5. Type of Coverage -- Policies pay claims either at actual cash value or replacement cost. Make sure you know which method is used by your policy. With actual cash value coverage, you receive only the value of the damaged items, less depreciation. For example, if your ten-year-old refrigerator is ruined by lightning, you would receive a check for the value of a ten year-old refrigerator. On the other hand, a replacement cost policy would replace your refrigerator with a new one.

6. Deductibles -- Your homeowners policy will specify a deductible, which is the amount you pay before the insurance company pays. Your deductible may have been set fairly low when the policy was issued, so you may want to increase it to reduce your premiums. In some areas, there are separate, higher deductibles for windstorm or hurricane damage. Review your deductibles with your insurance agent to see if you can significantly reduce your premiums with a higher deductible.

7. Flood Insurance -- Flood damage is not covered by your homeowners policy. Separate flood insurance policies are available through the National Flood Insurance Program. If you live in a flood-prone area, you were probably required to purchase flood insurance by your mortgage lender. Even if it is not required, it may still be a good idea to have flood insurance, since floods can appear unexpectedly and cause extensive damage.

8. Endorsements and Discounts -- If your policy provides low coverage limits for valuable items like jewelry or home office equipment, you should obtain endorsements to cover these items at their full value. Many policies also offer discounts for taking steps to protect your home, such as installing an alarm system or reinforcing your home against wind damage.

9. Regular Review -- Look at your policy every year to determine whether it still meets your needs. Work with a professional insurance agent, who is trained to provide you with expert guidance in selecting the coverage you need. If you are buying a new policy, get several quotes and compare the policies carefully.

This publication has been prepared as an educational resource to help the reader identify areas of potential concern. The publisher is not engaged in rendering legal, accounting or other professional services. The information contained in this publication should not be acted upon without first obtaining the advice of a professional adviser. 2004 © Florida Philanthropic Advisors, LLC. Material may not be used without permission.

You may wish to access NEW information this month at: www.ashland.edu/estate and “click” on “Planned Giving” in the left hand column.

Our planned giving director, Paul Ditlevson, can be of tremendous service in helping you integrate your giving goals with your overall estate plan. He can also help you prepare to visit your attorney. You can reach Mr. Ditlevson by calling 419-289-5090 or by email to pditlevs@ashland.edu or regular mail at 401 College Avenue, Ashland, OH 44805.