6 Common Property Insurance Mistakes That You May Literally Lose You Everything

Locating the correct home insurance coverage might not be particularly high on your list of financial priorities and, alongside such things as investment decisions and estate planning issues, questions about the language in your homeowners plan may seem barely worth considering. Even So, the more successful you become, the more complicated your asset-protection needs are going to beâ€"and the more you have to lose. Suppose, for example, that in addition to your primary residenceâ€"a historic homeâ€"you also own a house at the beach and a condo in the city.

For illustration, let's say that your properties are in 3 states, the value of your collection of Old Master paintings has grown quickly and you recently volunteered to serve on the board of directors of a charity. Almost every aspect of your present situation could cost you dearly.

Insurance laws vary widely from one state to the next, different sorts of property require specialized coverage and collections of art and other unique items could prove difficult to protect fully. As if this were not enough, serving on the board of a charity might subject you to additional personal liability.

Protecting yourself and your family may mean having to buy extra coverage, but additional insurance isn’t necessarily the answer. Rather, it is vital to review all of your needs, consider specialized policies or policy options and coordinate your insurance cover with other aspects of your financial situation.

Here are 6 different shortcomings that could prove costly.

1. Leaving gaps in homeowner's coverage.

Any homeowner needs to look at their coverage regularly so as to keep up with increasing replacement costs. But, insuring different kinds of home in different locales presents additional challenges. If you purchase insurance cover from more than one carrier you might be faced with contrary limitations, rules, and plan renewal dates. For example, the liability limit on the policy covering a second home might fall below the minimum on an excess liability plan intended to accompany the insurance cover on your primary home and you may well wind up being responsible for coming up with the difference.

2. Neglecting the unique characteristics of your property.

One of the advantages of of affluence is having the money to own great homes but one drawback is that they could be difficult to insure adequately. Ordinary homeowner's coverage is not going to pay for the materials and craftsmanship that is needed to rebuild that 19th century property you’ve painstakingly restored. Houses built on the coast could well face hurricane damage, while a place in the mountains of California might be at risk from earthquakes or wildfires.

3. Inadequate insurance for art and collectibles.

Standard homeowner's policies place a limit on cover for the loss of hings like antiques, furs, and other valuables. And while you could arrange additional coverage, insuring the real value of a collection of contemporary art will usually require a specialized plan which addresses a number of critical issues.

4. Omitting to organize insurance for household employees.

When an individual works for you or your family as, for instance, a nanny, landscaper or personal assistant you might be liable for medical expenses and lost wages if the individual is hurt on the job. A number of states require household employers to contribute to a workers compensation fund while in other states this is optional. Even So, providing such insurance cover might be required for ensuring your financial health.

5. Disregarding your liability as a board member.

Some form of excess liability coverage could help to protect you if you are sued as a director of a charity or, for more comprehensive protection, you might want to consider taking out special directors and officers liability insurance.

6. Failing to get frequent policy reviews and updates.

Your finances are not static and neither are your needs for insurance. The value of a collection may increase, extensive home renovations may mean a sharp rise in the value of your home and the re-titling of assets as part of your estate plan or because of divorce, a death in the family, or the birth of a child could necessitate plan changes. Even lacking any major events, you probably need to carry out a detailed review of your insurance cover at least every two years.