Homeowners Insurance Policy Investment Advice

A Good Policy Before Disaster Strikes is Your Best Investment Deal

A home is likely to be the largest investment most families ever make so you want to spend what ever is necessary to protect your family’s investment. Purchase enough coverage to avoid a major financial loss if you experience a catastrophic event. This means keeping realistic current value amounts of coverage on your house and contents. Home owners insurance comes in many different prices and configurations; it is important to get the insurance that fits. Flood and earthquake damages are not covered under standard homeowners insurance and must be purchased separately. The hurricane Katrina and Rita survivors discovered that hurricane coverage often excluded flood or storm surge damage even though that was caused by the hurricane winds. Be sure to understand the fine print and if you need to purchase a separate flood or water damage policy, it may be expensive but worth the cost. Premiums will cost widely different amounts in different areas of the country. While you want the best insurance possible you also want to hold the costs down. Follow these steps to get the best deals. 

In the aftermath of the hurricane disaster on the Gulf Coast many home owners found their insurance to be inadequate. Sometimes that was due to misunderstanding the policies and sometimes due to insurance company chicanery. These issues will eventually be sorted out but in the meantime it has set the rest of us to thinking about how well covered we are in the event of an emergency. Some estimates of the number of underinsured homes say as many as three out of five are underinsured by around 20% to 25%. (Coolidge, C., 2006, A Good Policy, Forbes 2006 Investment Guide, Forbes Magazine, 60 Fifth Avenue, New York, NY 10011)

1. A lesson learned from the victims of Hurricane Katrina is that it may be best to get separate coverage for wind, water, fire, or “environmental” damage. Try to be sure your policy includes incidental damage after a disaster such as the mold caused by the heat and moisture after hurricanes on the Gulf Coast.