Do you have enough homeowner’s insurance? The time to answer this question is NOT right after the devastating fire, tornado, or horribly violating robbery. Sadly, the answer for many families is “no.” Surprisingly, this is especially true for families in the Park Cities and North Dallas.
According to Brent Cooper, owner of Brent Cooper Insurance in Dallas, “Families in our communities - those with the most to lose – are often underinsured or incorrectly insured, even if they have riders for certain items like jewelry.”
Many homeowner insurance policies only cover household goods up to 60% of the insured value of a home (i.e. a $500,000 home provides $300,000 in coverage), but that is rarely enough for many homes, especially higher-end homes.
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“State Farm® , recognizing that its customers might be underinsured at 60%, improved their customers coverage to 75% with the option to go even higher, about 10 years ago,” noted Cooper. “When you have artwork, family silver, oriental rugs, antique or designer furniture and other treasures, the goods inside the home can be worth as much or more than the house itself.”
In addition, it is important to scrutinize the words of the policy. Confirm with your agent that your policy pays for replacing or repairing your contents on a “Replacement Cost” basis and not “Actual Cash Value.” The difference between the two can be significant when you factor in depreciation.
“Also, the quality of your home may be significantly higher than the median with textured walls, custom floors, expensive fixtures, hand carved wood and so on. When it comes time to repairing or replacing part of your home or its contents, you may feel victimized all over again by the amount that’s not covered.
“One issue I see often with ‘low-cost' policies, is that they may not provide for ‘similar, like, kind, and quality’ materials. Who wants to replace granite counter tops with Formica? This is how some homeowners’ policies work, unfortunately.”
Another common issue is that even if you’ve had your contents diligently inventoried, there’s a good chance it has been more than a year and you’ve added new items to your house that may have increased your need for coverage beyond the limits in your policy.
And the loss is far more than dollars and cents. “How can you replace or put a value on Nana’s family recipes or your daughter’s first steps on video?” asks Cooper.
Here are five steps that Cooper suggests every Park Cities and North Dallas homeowner take to help prepare for a loss:
- Inventory – If you’ve not yet done this, conduct a thorough video or photo inventory of your home and goods. “Open cabinets, closets, attics and garages. Capture your silver pattern, get everything while you are calm and collected. Stand in one corner of a room and shoot a photo across the room. Go to the other side and do the same.” says Cooper. “Under the stress of the tragedy, it is hard to remember everything. Pictures are a great help when writing up your claim for the insurance company. With the photos and/or video, still consider using the written inventory checklist as a guideline to help you capture important information like serial numbers, model numbers, etc. Be sure, also, to capture your home’s unique and unusual features from roof tile down to flooring.
- Inventory again – “Just like you replace the batteries in your fire alarms every year on daylight savings Sunday, you should have a regular day when you update your home inventory. Put it in your calendar. After the first inventory, it shouldn’t take as long to add on,” says Cooper.
- Evaluate your household goods – What items would break your heart if they were stolen or destroyed? Would mere money be enough? Also, that antique that has been in your family for generations, how much is it worth today?
- Make a disaster recovery plan. – What kind of backup can you create for those items? A family scrapbook can be scanned and reproduced nowadays even with those extra-large pages. Also, if you have all the photos stored in digital files off-site, you can re-create your special memory pages. Many important papers can be retrieved online or from some other source but if they can’t or it would be a hardship, then think about creating copies and storing them off-site.
- On-site and off-site storage – “For important documents and computer thumb drives, you want to make sure to have both on-site and off-site storage,” says Cooper. “Have a fire-proof, water-proof safe or portable box in your house to protect active items and an off-site safety deposit box or storage unit for hard-to-replace documents like passports, wills, insurance policies, marriage certificates, etc. Do the same for your sentimental treasures that you identified in step three.”
While the purpose of a video or photo inventory is to help recover from a loss, it can also help homeowners evaluate how much insurance they need. “I have a client with a chair brought over on the Mayflower. Obviously, they know its relative value, but items like this can appreciate, and addressing this up front before a claim, is extremely important. People sometimes forget that their hobbies and collections can be valuable like Dad’s sports memorabilia collection.”
Besides new goods coming into a house, families need to think about items that have left. “Many parents send their kids off to college with laptops, iPad®s and other electronics. Some homeowners’ policies cover your children’s property away from your home. Some do not or limit the amount of coverage.”
“With deductibles as high as they have become, it would take a large loss for the parents to make a claim for the stolen goods. Renter’s insurance on the other hand, is inexpensive with low deductibles of around $500.00. The annual cost for laptop coverage is about $30.00 if your carrier provides it. Be sure to record serial numbers. Sometimes items show up in pawn shops after a theft.”
In addition to a recommended yearly inventory update, a yearly check-up visit with your insurance agent is also a good idea. He can help you review your policy and make sure it meets your current needs.
Also, call your agent whenever you make a large purchase, inherit something of value, or remodel. He should be able to tell you if any coverage changes are necessary. Taking these steps will make you better prepared for dealing with the worst. Call Brent Cooper today for a free policy review and consultation.
Serving the Insurance needs of the Dallas Neighborhoods of University Park, Highland Park, Lake Highlands, Preston Hollow, Oakcliff, and Coppell.