Top 5 Most Overlooked Types of Insurance
When you buy a car, you get auto insurance. When you purchase a house, you purchase a homeowners policy. When you get married or have a baby, often times you purchase a life insurance policy to protect the ones you love. Outside of these situations, it’s typical for the average consumer to rarely give insurance a second thought. However, you might be surprised to learn how greatly you can be impacted if you don’t carry the following types of insurance, and just how inexpensive it may be to protect yourself.
1. Flood and Earthquake Insurance
As you may already know, flood insurance and earthquake insurance are not included in a standard homeowners policy. No matter where your home is located, there is a good possibility that you’re at risk for one or both of these catastrophes.
Most of California is at risk for flooding due to severe drought in the past few years. This can seem contradictory, but the dryer the soil, the harder it is to permeate with water. Because the ground can soak up a limited amount of water at a time, when heavy rains fall in areas where the land is exceptionally dry, any water that can’t be immediately absorbed into the soil becomes excess run off. In these situations, lakes, streams and dry river beds can fill quickly, causing overflow and flooding. Flood insurance policies in California can range from under $500 to over $2000 in some cases, per year, depending on the coverage selected and your level of risk.
It’s no secret that California is synonymous with earthquakes and is second only to Alaska in number and severity of earthquakes in the U.S. There are over 2,000 known fault lines in the State of California alone, some much more active than others. Earthquake insurance, unlike flood and homeowners insurance is typically not required by lenders. That fact, coupled with the sometimes lengthy period between major earthquakes and higher premiums can be attributed to why many at-risk homeowners don’t have coverage for this very real risk. According to an article recently published in the Wall Street Journal, a typical earthquake policy can cost anywhere from $230 to $1800 per year, again depending on the level of risk in your area.
2. Homeowners Replacement Cost (Updates, Remodels and Improvements)
If it’s been more than a couple of years since you secured your homeowners policy, especially if you’ve done any alterations or updates, its extremely important to review your coverage with your agent to make sure your policy actually covers your home for its full, updated value and contents. Many homeowners policies include an inflation guard, which automatically increases the coverage for your home at each renewal – typically at around 4% to 6% increments. Often, this isn’t enough coverage if you’ve made any substantial improvements to your home such as bathroom or kitchen remodels or additions. While doing improvements to your home will often raise the replacement cost, it can score you some discounts at the same time. For example, if you replace your roof, or install an alarm system, often this can net a savings of 5% to 10% of your premium.
3. Collections, Firearms, Antiques and Artwork
While most people are familiar with scheduling their wedding rings and expensive jewelry on their homeowners policy, a lot of folks overlook the other valuables in their home. Standard homeowners policies will have specific limits for valuables in all categories; for example on an average policy, you’ll get a limit of about $2000 for firearms and $2500 for china or silverware. Unless they were scheduled at their set values, Antiques and artwork would fall under the standard contents coverage of the policy, and would be treated as regular furniture and décor pieces. Coin collections, as well as cash are generally limited to about $200-$1000 on a standard homeowners policy, depending on the carrier. Scheduling your most valuable belongings on your homeowners policy can be inexpensive. Talk to your agent about your valuables, the coverage contained in your policy and any possible gaps.
4. Toys, Toys, Toys
Because many states don’t require insurance on golf carts, dune buggies, ATV’s, snowmobiles and personal watercraft like jet skis, these items are often overlooked when it comes to insurance. Your risk of accidents and injury while operating one of these vehicles is at least as high (or higher) as when driving your car. If you, or someone else operating a vehicle you own, cause an accident, you’ll be held liable for damages to others’ property as well as any bodily injury. In some cases, your homeowners policy may offer liability coverage, subject to your deductible, for damages to someone else or their property. However, could you easily afford to pay for damages to your own vehicle? Could you afford to replace the vehicle if it were stolen? These are questions you should ask yourself; and you may be surprised to find that a policy covering Physical Damage, Bodily Injury and $500,000 of Liability can cost as little as $300/year.
5. Weddings and Special Events
If you’ve booked a venue lately for any type of event, whether it be a wedding, retirement party or graduation celebration, you may have been asked to provide proof of event liability insurance or a copy of your homeowners policy listing the venue as an additional insured. An event liability policy will protect you if you’re held liable for damages to the property, or bodily injury if someone is injured. It also offers host liquor liability for alcohol related accidents and injuries, which can otherwise be excluded. In addition to liability protection, you can purchase cancellation insurance to protect yourself against the “what ifs”. This type of coverage offers protection against lost deposits, vendor bankruptcy, and even damages to wedding attire as well as coverage for stolen gifts and more. A typical one-day event policy ranges from $100-$500 and can save you thousands. For more information, visit this website.
As always, it’s important to speak to your insurance agent about your specific insurance needs. Contact me today, with questions or comments.