ARE YOU ADEQUATELY INSURED?

Ensuring that you have adequate insurance coverage to value is crucial to protect your property in the event of a loss. 

Your singular greatest risk – if you are not properly and adequately insured – is that most insurance policies have a coinsurance requirement; and if you are not compliant with that requirement, your insurance company could (and likely will) be justified in penalizing you when settling your claim.

Here are key factors to consider when looking to insure to value:

  1. Property Appraisal:
    • Obtain a professional INSURANCE appraisal of your property.
    • This assessment provides an unbiased estimate of the property's replacement cost, including construction costs, labor, and materials.
    • Regularly update the appraisal to account for changes in property value.
    • We can provide you with an insurance appraisal on your property, and update it annually for you.
      • There would be a fee for this service regardless of who you select.
  2. Replacement Cost Estimation:
    • Work with your insurance agent or a professional appraiser to determine the replacement cost of your property accurately.
    • This includes considering the current costs of materials and labor in your area.
    • This should also look into historical cost escalations.
  3. Construction and Building Materials:
    • Consider the specific characteristics of your property, such as the type of construction and building materials used.
    • The physical location of the property would also need to be considered.
    • Unique or custom features may require additional coverage to ensure they are fully protected.
  4. Inflation Protection:
    • Look for policies that offer inflation protection or an automatic adjustment of coverage limits to account for increases in construction costs over time.
    • This helps ensure that your coverage keeps pace with some economic changes.
  5. Code Upgrade Coverage:
    • Check if your policy includes coverage for code upgrades.
    • Building codes can change, and compliance with new codes may add to the cost of rebuilding.
    • This coverage helps bridge the gap between the old and new codes.
    • Check the age of your home and when last any permitted changes were made.
    • This is restrictive coverage – so you will need a claims professional to assist you to navigate this in the event of a loss or claim.
  6. Special Considerations for High-Value Items:
    • If your property includes high-value items, such as artwork, jewelry, or antiques, consider additional coverage options for these items.
    • Standard policies may have limits on coverage for certain types of property.
    • Consider the replacement values – not the sentimental values.
  7. Policy Limits:
    • Understand the limits (and coverages) of your insurance policy.
    • Ensure that the coverage limits are sufficient to rebuild your property in its entirety.
    • Don't forget to include coverage for other structures on your property, such as garages or sheds.
  8. Review Deductibles:
    • Assess the deductible on your policy.
    • Higher deductibles may reduce premium costs, but ask your broker to explain how the premiums would change as you increase or decrease deductibles.
    • Make sure you can comfortably cover the deductible amount in the event of a claim.
  9. Extended Replacement Cost Coverage:
    • Consider purchasing extended replacement cost coverage.
    • This provides additional coverage beyond the policy limit, offering a buffer in case rebuilding costs exceed initial estimates.
    • Many insurers do not offer this option.
  10. Insurance Professional Consultation:
    • Work closely with an experienced insurance consultant in conjunction with your agent or broker.
    • They can help you understand the intricacies of your policy, assess your property accurately, and recommend appropriate coverage based on your unique situation.
  11. Regular Policy Reviews:
    • Periodically review your insurance policy, especially after making significant changes to your property.
    • This ensures that your coverage remains up-to-date and aligned with the current value of your assets.
  12. Document Personal Property:
    • For homeowners, renters, commercial tenants, keep a detailed inventory of personal property.
    • Be sure to document with (including but not limited to) photos, receipts, and appraisals for high-value items.
    • This documentation will be invaluable during the claims process to establish the nature and value of lost or damaged belongings.
    • Store this information in the Cloud as well as on a portable drive.

By carefully considering these factors and working closely with insurance professionals, you can better ensure that your insurance coverage aligns with the true value of your property, reducing the risk of being underinsured in the event of a loss.

These are some of the “Best Practices” you can employ.  If you are uncertain, engaging a professional to assist you will make the process easier to follow and save time for completion.

Don’t be afraid to ask questions!!

See: What Happens If You Are Underinsured.