6 Frequently Seen Home Insurance Mistakes That You May Lose You Everything

                                                                                         

Arranging the right property insurance coverage might not rank high on your list of financial priorities and, compared with such things as investment and estate planning decisions, questions about the language in your homeowners policy could seem barely worthy of consideration. However, the more successful you are, the more complicated your asset-protection requirements 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 example, let us assume that your properties are in 3 different states, the value of your collection of Abstract Expressionist paintings has grown quickly and you recently volunteered to serve on the board of directors of a charity. Nearly every aspect of this present situation could cost you dearly.

The laws on insurance vary considerably from one state to the next, different sorts of property require specialized coverage and collections of art and other unique items might prove difficult to protect fully. Meanwhile, serving on the board of a charity could land you with additional personal liability.

Protecting yourself and your family may mean buying extra coverage, although additional insurance is not necessarily the answer. Rather, it’s important to review your needs, give some thought to specialized policies and coordinate your coverage with other facets of your financial situation.

Here are 6 shortcoming that could prove very costly.

1. Having gaps in homeowner's cover.

Homeowners need to look at their coverage on a regular basis so that they can keep up with growing replacement costs. However, insuring different kinds of home in different locations presents extra challenges. If you purchase insurance cover from more than one insurer you may face contrasting limitations, rules, and policy renewal dates. For example, the liability limit on the plan for a second home may fall below the minimum on an excess liability policy intended to complement the insurance on your primary home and you could well wind up being responsible for meeting the difference.

2. Ignoring the unique characteristics of your property.

One of the perks of affluence is having the means to own great homes but one of the drawbacks is that These may be difficult to insure adequately. Standard homeowner's coverage is not going to pay for the hard-to-find materials and craftsmanship that is needed to rebuild that 19th century showplace you’ve painstakingly restored. Coastal homes might well be subjected to hurricane damage, while a place in the mountains of California could be exposed to wildfires or earthquakes.

3. Under insuring collectibles and art.

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

4. Omitting to arrange insurance for household employees.

When an individual works for you as, for example, a nanny, landscaper or personal assistant you may have a liability for lost wages and medical expenses if the individual is hurt on the job. Several states require household employers to pay into a workers compensation fund while in other states this is optional. Nevertheless, providing such insurance may be obligatory for ensuring your financial well being.

5. Disregarding your liability as a member of a board of directors.

Excess liability coverage could help to protect you if you’re sued as a director of a charity or, for more comprehensive protection, you might want to consider arranging special directors and officers liability insurance.

6. Failing to get frequent plan reviews and updates.

Your finances aren't static and neither are your needs for insurance. The value of a collection may increase, extensive home renovations may mean a sharp rise in the value of your property and the re-titling of assets as part of your estate plan or because of divorce, a death in the family, or the birth of a child could necessitate changes to your plan. Even without any major events, you will almost certainly need to carry out a detailed review of all your insurance coverage at least every two years.

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