6 Common Property Insurance Mistakes - You Could Lose Everything
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6 Common Property Insurance Mistakes You Can't Afford to Make
When it comes to financial priorities, property and casualty insurance often take a backseat to investments and estate planning. However, as your assets grow, the need for comprehensive protection becomes crucial. Imagine owning a historic home, a beach house, and a city condo across different states, alongside a valuable art collection. You could even be serving on a nonprofit's board, exposing yourself to additional liabilities. Here are six common property insurance mistakes to avoid, ensuring you don't lose everything you've worked for.
1. Overlooking Homeowners Coverage Gaps
Regularly review your homeowners insurance to align with rising replacement costs. Insuring various properties in different locations can be tricky. Using multiple carriers may create inconsistencies in rules, limits, and renewal dates. For instance, the liability coverage for your second home might not meet the minimum requirement of an excess liability policy for your primary residence, leaving you vulnerable.
2. Ignoring Unique Property Characteristics
Owning distinctive homes can be rewarding yet challenging to insure. Standard policies often don’t cover the materials needed to restore historic properties. Coastal homes face hurricane threats, while California properties might be susceptible to earthquakes or wildfires. Urban condos or co-ops require tailored policies in line with building association coverage.
3. Underinsuring Art and Collectibles
Standard homeowners policies typically cap coverage for high-value items like art and antiques. To protect assets like contemporary art or vintage cars, consider specialized policies. Ensure accurate valuation through professional appraisals and regular updates. Clarify whether claims will be settled in cash or require replacement/restoration, and check if new acquisitions are automatically included.
4. Forgetting to Insure Household Employees
If you employ a nanny, landscaper, or personal assistant, you could be liable for their medical expenses and lost wages if they're injured on the job. Some states mandate household employers to contribute to a workers' compensation fund. Even if optional, providing such insurance safeguards your finances. Also, ensure any employee driving your car is covered under your policy.
5. Neglecting Liability as a Board Member
Serving on a nonprofit board exposes you to legal risks. Consider excess liability coverage, or a more comprehensive directors and officers liability insurance, to protect against lawsuits.
6. Skipping Regular Policy Reviews and Updates
Your insurance needs evolve with your financial life. Asset values may rise, extensive renovations could boost property value, and significant life changes like divorce or a new child might require policy adjustments. Even absent major events, conduct a thorough insurance review at least every two years to ensure you're adequately covered.
By avoiding these common pitfalls and keeping your insurance policies up-to-date, you can better protect your assets and achieve greater peace of mind.
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