How to Identify and Address Gaps in Your Homeowners Insurance

image for identifying gaps in homeowners insurance — One homeowner’s insurance policy gap: jewelry, artwork, coin collections, and other high-value items are often excluded, or covered for minimal amounts, under a standard homeowner’s policy.

You may not have considered homeowner’s insurance policy gaps. You own a home. You buy homeowners insurance. Simple, right?

Not always. There are a number of situations a standard homeowner’s policy doesn’t cover. Understand the gaps in a standard policy to avoid an expensive lesson.

Common Gaps in Homeowners Insurance

Many standard policies don’t cover these (and other) situations. Make sure you talk to your broker/agent if any of these homeowner’s insurance policy gaps apply to you.

Valuable Items

Jewelry, artwork, guns, coin collections, furs, silverware and other high-value items either aren’t covered or only covered for minimal amounts, in a standard homeowner’s policy. And if you keep a lot of cash at home, that usually isn’t covered, either.

Home-Based Business

The U.S. Small Business Administration estimates that more than 15 million businesses operate out of homes. While property coverage won’t be affected by having a home office or home-based business, business liability, workers’ compensation, and other potential sources of claims aren’t typically included in a homeowner’s policy.

Fuel

Gasoline or liquid fuel in your garage may void coverage of that structure, especially if that fuel causes a fire or is in some other way the reason for a claim.

Earthquakes and Floods According to the U.S. Geological Survey’s Earthquake Information Center, all 50 states have reported earthquakes. They truly can happen anywhere. And homes far from an ocean, lake or river can still be flooded after heavy rains. Sinkholes often aren’t covered, and they can happen anywhere, too.

Service Lines

As a homeowner, you’re responsible for the water and sewer lines that run from the exterior of your property to the service lines in the street. Standard policies exclude repairs to these lines, which can cost thousands of dollars.

How to Identify Gaps in Your Policy

There are two—technically, three—ways to pinpoint potential gaps in your insurance coverage: do it yourself, ask an expert, or a combination of the two.

Review Your Current Policy

Insurance policies hardly qualify as page-turners, but it’s important to know the terms and conditions of your policy. What are the limits of the policy? You may need a separate rider to protect high-value items. A standard policy may not cover the replacement of a high-end gaming computer, for instance. If you’ve invested a small fortune in landscaping, you may want to include supplemental tree and shrub coverage. Also, what types of perils are excluded from the policy? Knowing what is and isn’t covered will help you avoid filing a claim that will be automatically denied but still count against you on your C.L.U.E. report.

Consult with Your Insurance Agent

If you have questions after reading your policy—or you simply don’t have the time or inclination to review it firsthand—ask your insurance partner for guidance. Insurance coverage is very complex, and policy documents can be confusing. Call your insurance agent or broker and ask for help. Not only can he or she help you understand the specific terms of your policy and recommend optional protection, but a good partner can also suggest ways to manage your risk and help you qualify for the best rates.

Maintaining Comprehensive Coverage

Insurance is not a “set it and forget it” proposition. Just as the world around us continues to change, so do the factors that influence the policies that offer protection from sudden disasters.

Regular Policy Reviews and Updates

One of the best ways to protect yourself is to review your policy at least annually with your insurance partner. These powwows offer an excellent opportunity to update your insurance provider on any significant changes to the property (e.g., home renovations, deed changes) or your life situation (e.g., new family members, including furry ones). Policy reviews are also a good time to consider other insurance programs that might better meet your needs or to update your existing policy to reflect current replacement costs.

Keeping an Inventory of Personal Property

An up-to-date home inventory is an invaluable tool for ensuring you have the right coverage level before a loss and for recovering quickly afterward. If you don’t have a complete home inventory, spend some time over the next month or so to catalog your personal property. You can create a visual record with photos or video instead of writing (or typing) a list of each item or collection of bulk items, like kitchenware and linens. Update this list every year or whenever you purchase a big-ticket item, such as artwork or a home entertainment system.

The Importance of Complete Coverage

Your homeowner’s insurance policy provides critical protection against financial loss, but your specific situation may call for additional protection beyond standard limits. Review your policy carefully, and complete a thorough inventory of your possessions. Then, meet with a knowledgeable insurance professional, who can review your coverage and help you eliminate any insurance gaps.

If you have any questions about insurance coverage or would like a free review of your insurance policy, please call us at 877-576-5200.