5 Possible Holes in Your Homeowners Coverage

by Miranda Marquit · 0 comments

One of the best ways to protect your largest asset, your house, is to buy homeowners coverage (if you use a mortgage to buy, this is usually a requirement).

If something goes wrong, and your home is damaged and needs repairs, or if it is destroyed, you can use the insurance pay out to replace some — or all — of what you have lost. The loss of your home is devastating enough; you don’t want the financial hardship of paying to replace everything entirely on your shoulders all at once.

As useful as homeowners insurance is, though, it’s important to recognize that there are likely to be holes in your coverage. Here are 5 things to watch out for as you secure your homeowners coverage:

1. Business Use of Your Home

Not all homeowners policies cover what happens in your home office. If you run a business out of your home, damage to the equipment, and the area of your home that acts as your office, might not be covered. You also might not have liability coverage if a client is injured while on a business visit to your home office.

Double check the coverage. You might have limited coverage, or none at all. Consider adding business coverage to your homeowners policy if it is lacking.

2. Valuable Contents

Do you have a lot of valuable items in your home? From collectibles to fine art to heirloom jewelry, if you have valuable items they might not be adequately covered. Find out the limit on the contents portion of your insurance policy, and then increase the coverage, or buy specific coverage for particularly valuable items.

3. Liability

A portion of your homeowners policy is designed to protect you from lawsuits if someone is injured on your property. If you have a high net worth, though, someone might sue you for more than your homeowners policy covers. If you are concerned about this situation, look into umbrella insurance. These policies are designed to provide extra liability coverage above and beyond what your other policies provide. They can be a protection if you are worried about high-cost lawsuits.

4. Natural Disasters

Double-check your insurance policy to see what natural disasters are covered. You might be surprised to discover that some damage to your home isn’t covered in your specific policy. In many cases, flood insurance isn’t part of your homeowner’s policy. Other items like hurricanes, tornadoes, earthquakes, and mudslides might also be excluded. If you live in an area prone to any of these issues, there is a good chance that the natural disaster isn’t covered. Assess the situation, and determine whether or not additional coverage is warranted.

5. Increase in Value

Have you been in your house for a long time? Has the value increased from when you first bought? If so, you might not have adequate insurance. You want to be able to be fully covered for the current value of your home. Make sure that you have coverage adequate to the new value of your home so that if something happens, you can handle the replacement at current prices.

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