Issue Date: September 14, 2005

Insurance Lessons

By Jody Zink
Licensed Realtor in Ohio & Michigan

It won't happen. Won't happen to me. Not here.

What you may choose to put off or even ignore could bite you hard. Just because you have homeowners, renters or condominium insurance doesn't necessarily mean you have enough coverage or even the right kind of coverage.

Insurance is meant to help you pick up the pieces in case you're ever faced with a

disaster. But sometimes policyholders find out (after it's too late) that they don't have enough coverage to return to the lifestyle they were used to.

Families who lost their homes during Hurricane Katrina are just beginning to file insurance claims. Sadly, some of them will be denied. Companies can deny claims based on what caused the damage. Homeowners insurance would cover wind blowing the house down or rain coming through a hole in the roof, but homeowners flooded? Unless they had special flood insurance, they may be out of luck.

We can all learn something from this. I found out that even without a disaster, many of us are woefully underinsured. One estimate suggests two-thirds of Americans don't have the right kind of insurance or nearly enough.

If your home is ever destroyed, you'll want to be able to rebuild it to its original condition. This may very well cost more than its value on the open market. Costs to rebuild are typically more expensive than new construction. This can be especially true if your home was destroyed with many others perhaps in the wake of a flood or a tornado. Supply and demand can drive the cost of materials and labor to skyrocket, making it even more important to make sure you've got enough coverage.

It's a good idea to re-evaluate your policy. Since you first bought it, your needs may have changed, your home may have increased in value or you may have accumulated items not covered. Have you recently remodeled your kitchen or finished a basement? Maybe you've built a deck or added a bathroom. This will likely increase your homes value beyond the rise in inflation.

If your home itself hasn't changed, chances are what's inside probably has. As we accumulate stuff, we may require more insurance, particularly items of higher value such as jewelry, firearms or art. Keeping a policy up to date isn't likely the first thing on your mind after a big purchase, but it's certainly worth exploring to make sure you're protected.

Take the time to call your insurance agent. In previous columns I've stressed how important it is to work with your Realtor as a partner in achieving your real estate goals. Working with your insurance agent is just as crucial. He or she is an expert and can explain whether you have not only enough coverage, but the right kind of coverage.

A standard policy will likely insure your things at actual cash value. That's the value of an item at the time of loss. To make sure you can fully replace lost or stolen items, you may want to add an endorsement for replacement cost coverage, which would replace the item with one of similar make and model, regardless of the actual cash value. That term again: replacement coverage. It may cost you a bit more. Don't assume you already have it. Many people think they do. Some learn they don't until after misfortune has struck.

Take inventory of your possessions. One easy way is to videotape your stuff around the house. Then place the tape in a safe or family members' home. Just do it. If the worst ever does happen, you'll have a record of what you had.

In general, the most frequent dangers leading homeowners to file insurance claims are in this order: fire, wind, water damage and theft. This is a reminder to pay attention! In case disaster strikes, give yourself the best chance to recover. Steps you take now could make all the difference.

Jody Zink is a licensed REALTOR in Ohio and Michigan with the Loss Realty Group. Her column appears every other week in the Toledo Free Press. She can be reached at jody@jodyzinkrealtor.com or 419-725-1881.