Sure, You Have Home Insurance. But Do You Have Enough?

How much do you know about homeowners insurance? Do you have help you don’t need—or don’t have the help you need?

Although many high-end homeowners have access to professionals—lawyers, financial planners, insurance brokers, risk managers—many are underinsured. Take flood insurance, for example. A survey released in 2017 by the Insurance Information Institute, a trade association, found that nearly half of all American homeowners mistakenly believe that their homeowner’s insurance will cover flood losses. It is not.

Loretta Worters, vice president of the Institute, said: “These are common insurance myths that even the most sophisticated homeowners have.

Although most homeowner’s policies cover water damage caused by burst pipes or leaking appliances, a flood, defined under the National Flood Insurance Program as an excess of water over a normally dry surface, covers two or more acres of land. or two or more properties, is covered by separate flood insurance.

As people advance in their careers and create more wealth, insurance coverage becomes more important, experts say.

“As their homes, assets and wealth grow, the risk of loss increases,” said Scott Teller, senior vice president, Chubb Personal Risk Services. That’s why working with an insurance agent is so important—but so is contacting your agent periodically to let him know about his life and other changes that may affect your insurance needs.

Here are five types of insurance you may not realize you need.

Comprehensive flood insurance. Even if you have a flood policy, it may not be enough to protect you. Policies purchased through the National Flood Insurance Program cover up to $250,000 for your home’s structure and $100,000 for its contents. Ms. Worters said policies with limits of $10 million or more are available through private insurers for those who need more protection. Spencer M. Houldin, president of Ericson Insurance Advisors, recently wrote a flood policy for a high-rise beach house on Fire Island in New York. The plan provided $3.3 million in housing and $900,000 in personal property. Cost: $15,267 per year.

Jewelry and accessories. Whether your valuables are jewelry, art or a wine collection, you need “valuable coverage” to insure its full value. Standard homeowner’s insurance has limited coverage for these items and, in the event of a loss, deductibles may apply. Average cost: $10 per $1,000 of jewelry Education; $2 per $1,000 of coverage for collectibles or artwork.

Workers’ compensation. Workers’ compensation insurance covers medical expenses and lost wages for nannies, housekeepers and other domestic workers who are injured or sick on the job and is required by many states. It also protects you, as your employer, from liability. Average annual cost: $750 based on a salary of $50,000.

Cyber ​​insurance. Cyber ​​protection can cover your losses resulting from theft, hacking, cyberstalking or harassment. “If you accidentally click on a malicious link and get hacked, cyber insurance can be there to cover any stolen money and make sure you have the money and management you need to get your life and identity back,” said Mr. Teller said. Average annual cost: $250 per $100,000 of coverage.

Umbrella policy. Valuable people often end up in court. An umbrella policy provides additional coverage to protect you and your belongings when the limits of your home or auto are not sufficient to cover the cost of a lawsuit or accident. Some policies include protection costs within the premiums, while consumer insurance policies designed for high-cost families often cover premiums beyond the policy limits. Average annual cost: $200 for $1 million in coverage on a two-car home; $100 for every $1 million thereafter.

If you are thinking about adding additional insurance to protect your property, here are some things to consider.

Coverage varies greatly between carriers. According to Kenneth Sidlowski, director of the Horton Private Client Group in Orland Park, Ill., the policies offered by major insurance companies such as Allstate and State Farm are very different from those offered by companies such as Chubb and PURE, which are very helpful. ordinary people. Loss of utilities, for example, those that pay for expenses if you can’t stay in your home because of a fire or other injury, are included in the general policy, but Mr. Sidlowski said that high-cost carriers do not. t to limit job losses in many countries. Instead, they pay the purchase price as long as it takes to rebuild your home.

The title is important. Many high net worth individuals use trusts or limited liability companies to hold their homes. Mr. Houldin said that homeowners often forget to add the group as additional insurance to their homeowner’s policy. This would mean that if there is a lawsuit against the property owner for any reason, the corporation and you, as the beneficial owner, cannot be protected. “There are many examples of suits being brought against trusts or LLCs as property owners for things like slips and falls and what’s not being reported,” Houldin said. “Increasing the business does not raise the money, but it requires the approval of the insurance company.”

Find out the cost of replacing your home. The cost of construction materials and labor has skyrocketed due to the supply disruptions caused by the pandemic, which means that the cost of rebuilding your home may exceed your budget. Many homeowners may have less insurance because of this. Those with low-cost homeowners policies can be paid in most states a “guaranteed premium,” regardless of how much it costs to rebuild, but policies from reputable companies can leave you behind. “They can give you a settlement fee plus 20% to 25% and then their responsibility is over,” Mr. Sidlowski said. Read your policy to find out what limits are available, and, if necessary, increase it to cover the full cost of your home.

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