Your home may be worth as much or more than your retirement account; so it makes sense to track your home insurance as carefully as you do your IRA’s, your 401k’s and your investment accounts.
Getting Started
If you have not checked your policy in the last 12 months than you may want to schedule a review of your homeowner’s policy with your insurance agent. You buy, sell, giveaway, receive many things each year and to make sure everything is properly covered an annual review is very important.
Know Your Limits
With home improvements a national pastime and construction costs rising, it is a good idea to check your policy limits once a year. If you have remodeled, landscaped, tiled a bathroom, built a new fence, or just added ceiling fans chances are you have probably added some value to your home. Furthermore, with all of the foreclosures and short sales your limits may be too high. Today’s housing market is unstable at best; it is very important to make sure your limits are in line with the value of your home.
Rebuilding Is Different Than Buying
The replacement value of your home TODAY may be higher than the actual market value.
When you review your policy, remember that the cost to buy and the cost to rebuild are different amounts. So you may not necessarily rely on the market value of your home to set your insurance limits. An appropriate amount of insurance coverage will permit you to rebuild your home in the event of a total loss. The replacement value is subject to the physical characteristics of your home as well as the price for labor and materials in your area. In many areas, these costs increase over time.
Don’t Forget To Complete A Home Inventory
We recommend completing a thorough inventory of your home’s contents. Compare the value of your belongings to the personal property limit listed in your policy. You can hire a firm or you can do it yourself. Using a camera and a Colorado Vault & Safe Deposit Co. checklist will work extremely well.