Is your policy
enough to protect
By Tim Talevich
MAKING SENSIBLE improvements to your
home is usually considered a smart financial
move. Adding things like a finished basement, a sunroom or marble countertops adds
value to your investment. But are you adequately protecting that investment?
For many people, the answer is no.
According to a survey by Marshall &
Swift/Boeckh LLC, a company that specializes in building costs, 58 percent of houses
are undervalued for insurance purposes.
That means that if a disaster occurs, insurance may not cover the total replacement cost
of a damaged property.
The gap between actual replacement cost
and insurance coverage is due to several factors. One is that the costs of labor and building materials constantly rise. Another is that
houses appreciate in some areas of the country
at a quicker pace than in other regions. Many
homeowners don’t realize how these factors
can affect their insurance protection, and they
don’t increase their coverage to keep pace.
So what should you, as a homeowner,
do? It’s important to schedule a regular
checkup with your insurance carrier and
make sure the coverage carried on your policy is adequate, advises John Conlon, Costco’s
director of insurance services. Costco offers a
home insurance program through
Ameriprise Auto & Home Insurance (see
“Connecting” box). The insurance checkup
should cover three areas.
General coverage. First, does your policy
meet your unique homeowner’s insurance
needs? For example, home policies do not
cover flood damage, and coverage for earthquakes is almost always provided by a separate
endorsement. Do you need these, and are
they present on your policy?
In the same vein, do you have enough
coverage to rebuild your home in its current
form in the event of a total loss? A good way
to estimate rebuilding costs is by using a
reconstruction-cost calculator offered for a
modest fee by Marshall & Swift/Boeckh at
www.accucoverage.com. Members who pur-
chase their home insurance through Ameriprise Auto & Home Insurance can receive a
free reconstruction-cost estimate by calling
the client service department. The entire
process takes about 10 minutes.
coverage is adequate
peace of mind.”
—Tom Botsford, Ameriprise
Auto & Home Insurance
Last, are your personal possessions adequately covered? To answer this question, take
a complete inventory of your possessions
(consider making a video for proof) and
determine their value. Make sure to include
art, jewelry and antiques, which may require
special insurance riders or a separate policy.
Personal liability coverage. How much
coverage do you carry in case you are found
liable for damage or bodily injury to others?
A standard homeowner’s policy includes liability coverage ranging from $100,000 to
$500,000. An umbrella liability policy can
provide added coverage to protect your valuable assets.
Additional factors. Are you covered for
the cost of living expenses if your home is
damaged and you have to live elsewhere during repairs? Hotel and restaurant costs, car
rentals and other expenses add up.
“Many homeowners assume that they’re
adequately covered simply because they have
a homeowner’s policy,” says Tom Botsford, of
Ameriprise Auto & Home Insurance. “
Unfortunately, that’s not always the case.”
The financial consequences of not being
fully covered can be disastrous, he adds. A
homeowner could end up having to pay
thousands—or tens of thousands—of dollars
out of pocket to get a home back to its original condition after a disaster.
“Ensuring that coverage is adequate
offers homeowners peace of mind,” Botsford
says. “And it can ensure that their investment
in their home is protected.” C
Costco offers home insurance through
Ameriprise Auto & Home Insurance.
Executive Members receive additional
benefits. For information on the program,
call Ameriprise Auto & Home Insurance at
1-888-404-5365, or go to costco.com, click
on “Services,” then “Auto & Home.”