6 Common Property Insurance Mistakes – You Could Lose Everything

Insurance laws vary widely from state to state. Different kinds of property need specialized coverage. Collections of art, antique cars, and other unique items be difficult to protect fully.

Getting the right property and casualty insurance coverage may not rank high on your list of financial priorities. Compared with investment decisions and estate planning issues, questions about the language in your homeowners policy may seem hardly worth considering. However, they are important. Yet, as you become more successful, your asset-protection needs are to be more complicated. You also have more to lose. Suppose you own a historic home as your primary residence. Furthermore, you have a house at the beach and a condo in the city. The properties are in three different states. The value of your collection of Abstract Expressionist paintings has grown rapidly. And you just volunteered to serve on the board of directors of a charitable organization.

Almost every aspect of this situation will cost you dearly. Insurance laws vary widely from state to state. Different kinds of property require specialized coverage. Collections of art, antique cars, and other unique items are difficult to protect fully. Meanwhile, serving on a nonprofit’s board will subject you to extra personal liability.

Get more information about Life and Health Insurance here!

Safeguarding yourself and your family may mean buying extra coverage, but more insurance isn’t necessarily the solution. It is important to review all of your needs. Consider specialized policies or policy options. Coordinate your coverage with other aspects of your financial situation. Here are 6 different shortcomings that will prove costly.

1. Leaving gaps in homeowners coverage. Any homeowner needs to review coverage regularly to keep up with rising replacement costs. But insuring different kinds of homes in different locales poses extra challenges. If you buy insurance from more than one carrier, you may face contrasting rules, limitations, and policy renewal dates. For example, the liability limit on the policy for a second home might fall below the lowest. This can happen with an excess liability policy designed to complement the insurance on your primary home. You wind up responsible for the difference.
2. Ignoring properties unique characteristics. One perk of affluence is the means to own exceptional homes. One drawback is that they may be difficult to insure adequately. Standard homeowners coverage won’t pay for the materials and craftsmanship needed to rebuild that 19th century showplace you’ve painstakingly restored. Coastal homes face hurricane damage, while a place in the California mountains is subject to earthquakes or wildfires. Meanwhile, city co-ops or condos may need policies tailored to their buildings or associations coverage.
3. Under insuring art and collectibles. Standard homeowners policies limit coverage for the losses of antiques, furs, and other valuables. You could schedule extra coverage. Still, insuring the real value of a collection of contemporary art requires a specialized policy. If you have vintage muscle cars, you’ll need a specialized policy. This policy must handle several critical issues. How is the value of the collection determined? (You’ll need a professional appraisal when the policy is designed, with frequent updates as items appreciate.) Will a damaged or destroyed item be paid for with cash, or will you have to have it replaced or restored? Will additions to your collection automatically be covered?
4. Forgetting to insure household employees. When someone works for you or your family, you could be liable. This includes roles like a nanny, landscaper, or personal assistant. You have to cover medical expenses and lost wages if the worker is hurt on the job. Several states need household employers to pay into a workers compensation fund. In other states, it’s optional. However, providing such insurance is mandatory for ensuring your financial well-being. If an employee drives your car, also make sure he or she is included on your policy.
5. Neglecting your liability as a board member. Excess liability coverage could help protect you if you’re sued as a director of a nonprofit’s board. Or for more comprehensive protection, you want to consider special directors and officers liability insurance.
6. Failing to get frequent policy reviews and updates. Your financial life isn’t static, and neither are your insurance needs. The value of a collection may increase. Extensive home renovations mean a sharp rise in the value of your property. Re titling assets as part of your estate plans need policy changes. This can also happen because of divorce, a death in the family, or the birth of a child. Even lacking major events, you probably need a comprehensive review of all your insurance coverage at least every two years.