Have you ever taken a close look at your homeowner's or renter's insurance
policy? If so, the odds are you did so following a loss, before or after a claim
was denied.
Even a slow night on TV is not enough to compel most people to read an insurance
contract. Most get around to reading one only in the course of making a claim.
Unfortunately, by then the damage may be done and it’s too late to remedy the
situation.
The time to examine your insurance policy is now, before you need its
protection. Failure to do this could be very costly later.
Your review should focus on two general aspects of coverage: liability claims
and rights to compensation. Be sure you are adequately insured for liability
claims that might be made against you. Examine the policy provisions that define
your rights to compensation for losses caused by theft, fire or similar events.
In most cases, liability limits of $100,000 per person and $300,000 per
occurrence should be considered minimum levels of coverage. The high cost of
medical care makes lower limits imprudent for most people.
In addition to adequate liability insurance, we recommend buying "medical
payments" coverage of at least $25,000 per person. This permits most people
injured on your property to be promptly reimbursed for their medical expenses
without the need to establish fault on your part (fault remains a prerequisite
to collection under your liability coverage).
Don't stop reading the policy yet. Are you comfortable with the protection you
have for damage to or loss of your home and its contents?
Again, limits of coverage are important. Amounts that were adequate ten years
ago would be woefully inadequate today. Many insurance companies offer an
automatic inflation adjustment feature that keeps your coverage in line with
increasing costs.
Determine whether your company will pay the replacement cost of your property,
or only its depreciated fair market value. A 3-year-old television set is worth
only a fraction of what it would cost to replace it with a comparable new one.
Finally, carefully examine the exclusions in your policy. Some events, such as
flooding, may not be covered at all without the payment of an additional
premium. Some items of property, such as jewelry, artwork, collectibles and
cash, may also be affected by special limitations or requirements. Most such
items have to be listed separately in order to be covered.
Get familiar with the protection you have before you need it. It could eliminate
a lot of anger and frustration later.
