This weekend's Wall Street Journal had an interesting article about house insurance. This is quite timely, as September is National Preparedness Month and a year ago today Hurricane Katrina was making its way toward the Gulf Coast (Katrina hit land on 8/29/05). If you had to evacuate your home, would you be able to find your home owners' insurance policy (and other important documents) quickly?
I often help clients set up files for various personal finance documents, including their home owners' insurance policy. No matter where you live it is important to make sure your home owners' policy is up to date in the event of an unforeseen emergency. The Wall Street Journal Reported that 58% of houses are undervalued for insurance purposes (according to a survey by Marshall & Swift/Boeckh LLC). The survey went on to state that of the 58% of undervalued homes, the homeowner typically only has enough coverage to rebuild about 80% of the home.
Here are my tips for organizing your insurance papers and making sure that you are adequately covered:
1) Have a safe place where you keep your homeowners (or renters) insurance policy. This can be a hanging file folder or three-ring binder, whatever works best for you.
2) File your policy immediately after paying the premium (annually for most people).
3) Keep an inventory of your personal property.
4) Review your policy annually with your agent to make sure you are appropriately covered. Be sure to bring your file from previous years.
5) Let your agent know if you have made improvements to your home.
6) Remember the insurance valuation is based on the cost to rebuild your home, not market value. When the cost of raw materials rises, so does the cost to rebuild your home.
If you do not know where to start when it comes to organizing your home owners' insurance, contact a reputable professional organizer or organizing consultant in your area. We serve Southeast Michigan, Northern Ohio and will travel further upon request.