Friday, December 22, 2017

The Tragedy of the Under-Insured

Hundreds of Californians who lost their homes in the recent wildfires are depending on their insurance policies to help them rebuild their lives. In many cases, the payout will be smooth and the amount will be enough to cover the reconstruction costs. However, for others, there could be a rude awakening. 

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The Under-Insurance Problem

Studies show that a shocking 60% of homes in America are under-insured. The average shortfall is in the range of 20%. It is naturally tempting to reduce insurance premiums so that the money saved can be spent elsewhere. And 20% does not seem like a huge difference – the gap can always be covered if the need arises. However, thinking this way is a mistake. For example, if a home worth $500,000 is destroyed, a 20% shortfall in the insurance coverage will be $100,000. That is not a small amount that can be easily made up. The gap between your insurance coverage and what you need to rebuild could be where your plans for your family’s future get tripped up. Paying an insurance premium year after year may, over time, appear to be a waste. It is only when you need the money that you realize cutting back on the coverage was a mistake.

Knowing How Much You Need

You pour your life’s savings (and perhaps more) into your home. You know exactly how much it cost and so,you think, getting the right insurance coverage should be easy. But that’s not correct. What the home cost some years ago is not what it will cost today. A home that cost $600,000 in 2010 may cost over $750,000 today. A policy that pays out $600,000 is not going to be enough to rebuild. On top of that, there are all the other expenses that come with paying for temporary accommodation till your home is ready to occupy.

Another problem that occurs is that many homeowners fail to update their insurance policies after making improvements or additions to their homes. A home could have $50,000 worth of work done on it over a few years. That shortfall is bad enough, but it is often worse. The $50,000 worth of improvements could add $100,000 to the value of the home. Without adequate coverage, rebuilding it to the same standard that it was, will be nigh impossible.

Check Your Insurance

The California Department of Insurance advises all homeowners to check and see if their insurance coverage is enough for them to rebuild. In addition, an inventory of the contents of the home should be regularly updated. This sounds simple enough, but insurance is a complicated subject and it is easy to make mistakes. These mistakes may not come to light until a home has been lost and the insurance payout is not enough for rebuilding. Getting the advice of an insurance agent will help you to ensure that you have the right coverage. This is not a one-time exercise but an action that should be undertaken every few years so as to ensure that when required, there will be enough money to rebuild the home and protect your family’s future. 

Preventing Thefts During Holiday Season

The holiday season is something that everyone looks forward to. Unfortunately, that “everyone” includes criminals too. We love the holidays because it’s a time for family, friends, fun and festivities. Burglars love it because,for them, it is the time for easy pickings. Thefts and break-ins skyrocket during the holidays because criminals know that this is when homes are left empty for extended periods, and people, preoccupied with holiday activities, tend to become careless about precautions they normally would take. Here’s what you can do to make life more difficult for burglars and keep yourself from becoming another crime statistic.

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Keep Your Lights On

How do burglars know if a house is empty? The simplest way is to look out for those that have no lights on at night for a few days in a row. That usually means that the family is away. If you have automatic timers installed set them to turn the lights in various rooms on and off at set times of the evening and night. If you don’t have timers, ask a neighbor to drop in every alternate day or so and turn on the lights for the night. The neighbor can also collect any mail that may be lying on the doorstep – that is another giveaway that no one is at home. Do not forget to stop newspaper delivery for the days you will be away – a pile of papers in front of the house is a burglar magnet!

Protect All Entry Points

Thieves will enter a house from wherever they can, not just the front door. Before going out of town spend a few minutes double checking that all possible entry points to the house are securely closed. That includes doors, windows, garages, French windows, and so on. If you have an alarm system installed, turn it on and check that it is working. Ask your neighbors to keep an eye on your home and report any suspicious activity, such as strangers lurking around, to the police. You can also inform the police about your absence from home and request them to do extra drive byes during that time.

Protect Your Purchases

Holidays are a time for shopping. As you go from store to store, the many bags in your car would be a tempting target for thieves. Keep all your purchase out of sight in the trunk and go home between stores as much as possible to leave your shopping in the house. Remember to ensure that your car is always locked and try to park only in well-lit places that are not deserted.

The Best Protection

Crooks are smart and they are always looking for ways to outwit all the precautions you take. There is no such thing as a sure-fire guarantee that you will not be robbed, no matter what you do. The best protection for you and your family is to ensure that your insurance coverage is enough to allow you to recover, if you should be robbed. Your homeowners insurance policy may not be enough. Talk to an insurance professional to see if there are gaps in your coverage that you need to fill. Once that is done, you can rest assured and fully enjoy your well-deserved holidays.