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Is Your Home Protected?

Gaps in insurance coverage create unnecessary risk

Homeowners make many choices as they create their dream dwellings. Which countertops best enhance the cherry cabinets? Do the faucets complement the pedestal sink in the powder room? Is the security system adequate to protect the house?

Amid these seemingly endless and sometimes overwhelming details, homeowners often don't pay enough attention to one of the most important decisions for their home-how much protection to purchase through their homeowner's insurance.

"Many people risk their houses, valuable possessions and savings by not carrying the right level of insurance protection," says Joe Lesher, CPCU, vice president, insurance services for AAA Colorado.

This is especially true for owners of upscale homes. There's a false sense of security that a typical homeowner's insurance policy will protect the property of these customers. "In fact, standard insurance products often don't respond adequately to property or liability losses involving more expensive homes and valuable possessions.

Homeowners who rely strictly on the typical insurance policy could find themselves paying more out of their pockets due to coverage gaps. They should consider the following when purchasing homeowner's coverage:

• For the home itself, consumers should verify with their agent that the policy is written for the full replacement cost value. It is important to have adequate coverage to repair or replace the structure at today's prices.
• Home contents represent the biggest gap in coverage for many homeowners. A typical policy provides 50 percent or more of the total home limit to replace contents. Yet these policies may offer limited coverage for valuable possessions such as cameras, collections, fine art, sporting equipment, jewelry and musical instruments. To protect their valuable possessions, homeowners should work with an insurance agent to create a stand-alone, personal- articles policy that lists each item, its description and value if necessary.
• Some advance planning can save time, money and headaches if a loss occurs. Homeowners should create a written inventory, keep receipts, photograph or videotape their possessions, and keep the inventory in a safe deposit box.
• When it comes to liability limits, many consumers mistakenly believe that $300,000 liability coverage provides enough protection. This may not be true for homeowners with upscale homes and significant assets. In the event of a lawsuit, these homeowners could be targeted based on their assets. A supplemental umbrella insurance policy provides an added layer of liability protection.

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