Helpful Hints for Homeowners

By William Ross Jr, CPCU, CIC

As we begin a new year, this is a perfect time to take a moment, to take stock, reflect on the year and years that have passed, and give some thought to what we might do differently from this point forward.

With that in mind, here are a few helpful ideas on how you might avoid unpleasant surprises, and in the event the unfortunate DOES occur, how you might minimize its financial impact.

Those of you who own your own home or condominium seem to have something in common. You have an awful lot of "stuff".

This reminds me of an old George Carlin routine, but it's true. We spend our entire lives gathering, accumulating, and building a significant amount of material belongings. What we often don't take time to realize is in the blink of an eye, it can all be gone.

Get your hands on a video camera or digital camera, and take an hour this weekend to walk through your home. Open up closets, cabinets, etc and record everything.

Go room-by-room and don't miss a thing, even the garage and basement. Don't forget the things you have stored in boxes or storage containers. Open them up and take a picture. Take close-ups of makes and models of particularly expensive items.

Then take that tape, video card or even better the DVD, and put that in your safety deposit box or make an extra copy and keep it somewhere safe away from home.

Why do this, you ask? Imagine if you were to come home from work or vacation to find nothing but a pile of ashes -- heaven forbid. We've had clients go through that kind of catastrophic event, and regardless of how good your memory is, there is simply no way to remember everything you have (or had). Stack on top of that the stress of relocating and rebuilding, and, well, you can see my point.

That tape, or that video card is going to be worth countless hours and avoid unimaginable stress and aggravation. But so few actually take the time to do it.

Check your home's "Insurance Value". When looking at your policy and the value shown for the dwelling, forget what the Realtor® said it's worth. Forget the tax assessment value, and don't go by what your neighbor's house was bought or sold for.

Think only about what it would cost to "rebuild" the structure, from the ground up. That cost of reconstruction is the value you want to be insured for, nothing less.

Nearly two out of every three American homes are underinsured according to Marshall & Swift/Boeckh LLC (MSB), a leading provider of building replacement cost data.

The kicker is, this type of coverage is so very inexpensive, and to skimp here just doesn't make any sense.

If you're still unsure, have your agent work up a replacement cost estimate, or get an opinion from a homebuilder you trust as to what it would cost to rebuild.

Review your "Valuables". Most homeowners policies place strict limits on theft of things like jewelry, silverware, guns and furs. If you have a collection of these items or any one item of significant value, you will find much broader coverage by "itemizing" them on your policy and placing specific values on each item. This not only avoids the theft limitation, but also provides coverage for things like "mysterious disappearance" (losing a stone from a setting for example).

Use the same approach with things like fine art, antiques and other "collectibles". If the value is significant, play it safe and get it itemized. All you need is a recent appraisal or bill-of-sale and your agent can list these items on your policy separately.

Increase your Deductible. A home or condo policy with a $250 deductible is crying out to be updated, yet we find folks in this situation every day. Are you really going to submit a $300 claim? Boosting your deductible up to $1000 or $2500 will free up premium dollars you can spend where they'll be more effective.

These are just a few ideas that if followed through on can not only save you significant time and money, but can also help you get a much better night's sleep this year.