How to make sure you have enough home insurance

How to be sure you have enough home insurance

How to read a policy
Why you must read the fine print
Making a claim
Don't buy what you don't need!
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So, you have bought the home of your dream more than five years ago. When you applied for a mortgage, your lender insisted that you take out home insurance that was equal to the value of your home. Since then, you have added some new antique furniture, a Jacuzzi and a sauna, received diamond jewellery for Christmas and the overall value of your property has increased.

Now, you are left wondering if the home insurance policy you currently hold is enough to cover the new buys and improvements made to your home. How can you be sure that you have enough cover for your current home?

Definition of a Homeowner’s Policy

In general, a homeowner’s insurance policy protects the structure of the home, your possessions and sometimes people residing in the home. In other words, a homeowner’s possibly can combine personal liability insurance with hazard insurance and allows you to receive payment in the event of damages or loss.

Become Familiar with Your Policy

You must become familiar with your policy and know it inside and out. Each policy is different, so make sure you take the time to thoroughly read through your booklet and understand it completely. While you are reading through your home insurance policy, ask yourself these questions:

- Am I protected against lightning, fire, theft, smoke, etc.?
- Am I protected against earthquakes, flood, war and other natural disasters?
- How much cover do I have? How much cover do I need?
- Does my current policy protect high-value items like fur coats, jewellery and antiques? Have I had these items appraised? When? Does the insurance company know about these items?
- What is my excess amount? Can I afford to pay this in the event of a disaster? Should I consider increasing this amount to receive lower premiums?
- What type of property valuation does my provider utilize, replacement or actual cash cost?
- How much cover do I currently have for my possessions? Is it only half of the value of the home or more?

Conduct a Home Inventory

Now that you know what is covered and what you currently have, you will need to figure out if you have enough cover for your belongings. You can either hire a professional to appraise your items or do it yourself. If you do it yourself, go from room to room and make a list of all your property including linens, instruments, clocks, jewellery, audio and computer equipment and any other valuable items you may have.

Get a Home Appraisal

If you have made significant changes to your home or if you sincerely feel that your home has increased in value, it may be worth your time and money to get a formal appraisal by a licensed professional. Not only will you know the exact value of your home, but you will be able to determine if you have enough insurance to cover it. Houses are large financial investments and typically increase in value each year.

Evaluate Your Cover

While looking at your policy and your home inventory list, contact your insurance company to speak with a representative. They can help you to determine whether or not you have adequate coverage. If you do not have enough, be prepared to spend a little extra on your next premium.

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