How much insurance coverage should I buy for my house?

Insuring your home for the market value rather than the cost to replace it is one of the most common mistakes homeowners make. Homeowner policies are designed to cover the cost of repairing or rebuilding your home in the event of a covered loss. Therefore, the insurance company will determine an amount of insurance that represents the replacement value of your home. Look for a company that assists you in the valuation of your home. Additionally, look for a company that provides Extended Replacement Cost. This coverage helps you rebuild your home, even if it exceeds the amount of insurance on your policy.

What limit of liability should I choose?

Ask yourself, “How much can I afford to lose if I am sued?” The amount of personal excess liability coverage you choose depends upon individual requirements. Review your assets: your home, other personal belongings and investments. Select a limit that provides adequate financial protection and be certain that your insurance company can provide this limit. Because the cost of litigation can be very expensive, you also should look for additional coverage for defense costs. Coverage is available in million dollar increments up to $50 million.

I own a condominium and I am told that I need Alterations Coverage. What is it?

 Additions and alterations are permanent improvements to condominiums and cooperatives. Many people mistakenly believe that the condominium association’s policy covers interior improvements, such as floor coverings, cabinets, bookcases, wall coverings, kitchen appliances and light fixtures. Generally, it does not. Additions and Alterations Coverage is protection you can purchase for interior improvements that you have made to your condominium or cooperative. Most policies automatically provide additions and alterations coverage in the amount of 10% of your contents coverage. If this is not enough coverage, you can purchase an additional amount.

Is my jewelry fully covered by my homeowner’s policy?

Most people do not realize that many homeowners’ policies offer only $1,000 in coverage for theft of jewelry. Given that this limit is generally less than the cost of an average engagement ring, it is doubtful that most homeowners have enough coverage for jewelry. Look for a policy that provides Agreed Value for the best loss settlement on scheduled items. You also should select a company that makes it easy to insure jewelry by requiring appraisals only on high value items.