Residential Fire Prevention & Response - Part 2

Start with a policy review. An insurance policy is a legal contract that outlines coverages, exclusions, restrictions, and limitations. Find out what is and is not insured. Compare this with your coverage needs. Identify gaps and ask about optional endorsements that can cover your unique needs.

Look at the policy declarations. The declarations page identifies coverage limits, endorsements, deductible, and descriptive information (name, address, year and type of dwelling construction, etc.). Confirm you have enough coverage on the dwelling, other structures, and personal property. Note additional coverage endorsements that are part of the policy. Be familiar with the deductible. Verify descriptive information is accurate.

Choose a homeowners insurance limit based on the dwelling's replacement cost. Replacement cost is how much it takes to rebuild with materials of like kind and quality. Market value, appraised value, and land value do not affect this figure. It is best to insure for the dwelling's full replacement cost. If you choose a lower amount, be sure it is in line with the policy's co-insurance requirement. Insuring for less than the co-insurance requirement (often 80% of replacement cost) is a problem if a loss occurs. The claim settlement may be substantially less than the cost of repairs if the home is underinsured.

Create a personal property inventory. Make a detailed, room-by-room reference that describes each belonging. Include brand name, make, model, serial number, purchase date, and price whenever possible. Receipts, photographs, and appraisals are also helpful Store the inventory in a safe deposit box, or other secure off-site location. Use the inventory to evaluate your personal property needs. Consider buy-back endorsements to cover high value items like jewelry, art, silver, and more.

Maintaining adequate insurance is an ongoing process.