Are You Wasting Money On Homeowners Insurance?
This is a question that many people ask themselves every year at renewal time. For those who didn’t have a claim over the past 12 months, or maybe over many years, some begin to think of it as an expense rather than an investment.
And in reality, you might be wasting your money. You might have the best policy money can buy. Certainly replacement cost coverage rather than fair market value coverage. The cost difference is minimal considering the pay-back if you have a claim. We highly encourage everyone to choose a replacement coverage policy.
You won’t get if you don’t ask
Back to the “might be wasting money” comment. If you have a loss, you will be required to provide a list of every item you want replaced. If you can’t do that, then you will most likely not have an equitable claim after a major fire, theft, or natural disaster. The insurance company needing a list of items and their value makes sense. As policyholders, none of us want an insurance company just to pay someone what they “claim” they had. Fraud would go through the roof! (Fraud is already a multi-billion dollar issue!)
So when an insurance company requires this information, it is because they want to be sure they are being financially responsible to others. Can you imagine what the premium costs would be if everyone just received the full amount of their insurance coverage, without proving the loss? What if they lost only 50% of their belongings? It’s just not good business to pay out without proof from the policyholder.
OK, now you’re thinking, “But I paid in all these years; I deserve it.” Yes, you do, and the insurance companies want to pay you what you deserve. All they ask for, to be fair, is an itemized list of what you need replaced. Then they can pay you an equitable settlement to get you back to where you were before the loss.
After a major loss (or even a small one), this task can be daunting. Though we can help people create their home inventory after the loss, many items are completely destroyed beyond recognition. So those items will never be replaced because the homeowners can’t remember what those big chunks of plastic or piles of ashes were. It is especially emotional after the loss, which heightens the opportunity to forget many items they lived with every day. Burglaries are just as difficult, because there is nothing there to which they can refer – not even a pile of ashes. Therefore, it’s up to you to ask for all items you’ve lost. If you don’t ask (because you forgot about them), you won’t receive the funds to replace them.
Make the claims process easier
Having an inventory of your home or business now, before you need to file a claim, will make the process easier. It will most likely also net you a much high recovery amount. This is because you’ll have a list and photos of everything you owned before the loss. This enables you to remember and prove what you owned. This, then, helps you ask for everything you need replaced. You’ll remember the large furniture, appliances, and electronics. But what about all the little items that will be forgotten? Or the inability to prove a high-cost computer over a lower priced netbook? Your inventory will supply the proof you’ll need.
Fewer questions and a faster and more equitable settlement. With an inventory, you won’t be “wasting your money on insurance.” Rather, you’ll help ensure that your investment was well worth it!