How MUCH is ENOUGH INSURANCE?

Summer’s here! Barbecues. Burgers and beer. It's a good time to review your insurance coverage. If an out-of-control cookout cooks your castle, are you prepared?

Household losses

People commonly see insurance as a once-and-done purchase. Renters buy policies to meet landlord requirements, auto-renew and forget it. Income stretched homeowners often buy bare-bones policies to satisfy the bank while minimizing premiums. But “required” is often inadequate.

Old coverage may not suffice now. Have you updated your policy to cover the increased worth of your possessions? 

Renters’ insurance covers either depreciated cash value or replacement cost, which is pricier coverage. Depreciated value means that if you bought your sofa 10 years ago, you would get reimbursed for its current value. Replacement cost means that you would get money for a new sofa.

Natural disasters happen

If you’re outside California, don’t think you’re earthquake safe. Quakes span much of the west. Similarly, flood insurance is an obvious buy for folks along the Gulf Coast, eastern seaboard and major rivers. But according to FEMA, low-risk areas generate over 20% of National Flood Insurance Program claims – and about one-third of flood-related federal disaster assistance. 

In 2017, the average paid flood insurance claim was about $92,000, according to the Insurance Information Institute and FEMA.. Could you handle that? Flood risks can change, too, from changed community development. 

Even in disaster-free areas, you may be unprepared for the worst. Most policies cover damage from hail, fire, wind and tornadoes. But basic policies exclude most mold. Some insurers offer extra mold riders. But it costs a bit more. So does extending coverage for sewer backups. Many skip these riders. If you're ankle-deep in sewage, the last thing you want to hear is it isn’t covered.

Homeowners insurance includes lawsuit coverage. But it’s usually bare-bones. If someone suffers a catastrophic injury on your property, you can be liable for their lost income, medical bills, personal damages and trumped up trauma.

You're sued and ...

Most critically, make sure you’re protected from personal liability. Homeowners insurance includes lawsuit coverage. But it’s usually bare-bones. If someone suffers a catastrophic injury on your property, you can be liable for their lost income, medical bills, personal damages and trumped up trauma. Costs can mushroom, exhausting your coverage – leaving you stuck for big bucks.

Umbrella policies can protect you, adding a million dollars, even more, in extra liability coverage – protecting you from having to sell your home or other assets.

Homeowners’ policies usually provide liability protection up to $100,000. If an injured guest sues you for $350,000 in medical bills, lost wages and more, you could be in trouble. A middle-class family’s umbrella policies should roughly equal their net worth., Ultimately how much insurance you buy comes down to how much risk you readily endure.

After reading this, do you still think you have enough insurance? Click here to contact us to find out how we can help fill any gaps or help you evaluate if you do or don't have enough insurance.