Homeowner’s Insurance In Action

Your home may well be your largest investment and Homeowner’s insurance is the best way to protect the financial value of it. You must be familiar with your homeowner’s policy to fully understand what is and what is not covered. Insurance claims can become quite complicated. For instance, if your home were to burn down because of a gas leak, was that leak caused by an earthquake? If it was, would you be covered? Maybe. It might depend on whether you specifically had earthquake coverage. So, familiarity with your policy is paramount.

Know who to call. Know what the claims procedures are for your company. Keep your insurance information in a safe place. Keep your contact information in your wallet, a copy in your workplace, if possible. If you have good friends or relatives in another part of the country, offer to keep information for them and have them keep information for you. Also, agree to use one another as contacts in case of emergency. Teach all loved ones who might get separated in a catastrophe to contact that person.

Take pictures or videos of your home and belongings and send a copy to the safe place. It will help make a claim.

Keep your home well-maintained. Don’t let things slide—they just get more expensive to fix if you do.

Keep things in perspective. Home insurance will not protect you from things that happen. All home insurance can do is pay money to repair or replace things that have dollar value. No amount of insurance can compensate for a life. No amount of insurance can duplicate sentimental value. No amount of insurance can prevent disasters.

Do have a family plan for emergencies. Do have a first-aid kit in the home and in the car and know how to use it.

And, if at all possible, do get a dog that knows how to bark (and when). A dog is your best protection from burglars.

Do enjoy your home and family. No one ever knows how long they have to do those things.

‘Replacement Cost’ vs ‘Purchase Cost’

Aren’t they the same thing? No. If you have a lovely Chippendale chair that’s been handed down in your family since it was purchased new, and an elephant sits on it and breaks it, which would you rather have, the price your great-great-great-great ancestor paid for it, or what you could have gotten from Sotheby’s? That’s the difference. Okay, maybe that was a little extreme. But most of us don’t update our insurance policies even annually. Often, we just contract for a policy and pay the premiums and don’t give it another thought. Years later, when we might have a claim, we find things have changed. Maybe there was a lot of inflation, who knows? And the thing we originally purchased for $400.00 now costs $600.00. If the policy is for replacement cost, the thing is replaced. If the policy is for purchase cost, you get $400.00 to buy a replacement that is cheaper quality than you had, or, you can pay the difference yourself.

So why would anybody go for purchase cost? Well first off, the policy is probably cheaper. Also, in today’s electronics market, if what you are insuring is mostly electronic equipment, the original purchase price may be higher than replacement cost. Everything depends on individual circumstances.

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