Protecting Your Home
Homeowner insurance is a must, of course, if you own your home. All homeowners realize that, but it's not always easy to determine the right dollar amount of homeowner insurance you should have for adequate protection.
Homeowner Insurance is designed to offer you the financial wherewithal to rebuild if you're faced with natural or other disaster such as fire, flood, hurricane, tornado, earthquake or terrorism. Unfortunately all too often homeowner policyholders realize far too late that they haven't adequate homeowner insurance coverage to help them get back to their customary way of life.
If you have homeowner insurance, renters insurance, or insurance on your condominium that doesn't necessarily mean that you're fully protected from any unforeseen disaster or tragedy. Though the percentage varies by study, third party research reports have determined that between half and three fourths of homeowners in the U.S. have underinsured their primary residence.
You should periodically meet with your homeowner insurance agent and review your homeowner policy, taking into consideration the current replacement value of your home and the goods and property covered under your policy. Since you first purchased your homeowner insurance, your requirements for coverage might have changed, the value of your home most probably has increased in value, or you might have made significant purchases and improvements that now need to be added to your homeowner coverage.
Your homeowner insurance policy does add a small annual inflation cost to the policy which, all things being the same, would be adequate. If, however, you've remodeled, reheated, added on a deck , patio or pool, or refinished your attic or basement, your house will have realized a significant value increase. You'll almost certainly need a new assessment so that should a disaster occur you can replace what you've lost.
Should disaster such as tornado, flood or fire befall your home, your homeowner policy could have a ceiling on the dollar figure they will reimburse you. A homeowner general casualty policy, for example, that is endorsed to replace the cost of the building, the insurance carrier is pledged to pay up to 125 percent of the home's valuation. If, in this example, the house is insured at $200,000, the homeowner policy will reimburse the homeowner $250,000. If you've underinsured your home you may end up holding the bag for the remainder of the replacement costs.
If your home is a costly upscale property you may want to think about a homeowner policy feature that guarantees coverage up to home replacement value. Many insurance firms offer this upscale homeowner policy feature.
Consider too that while your home may not have increased in value beyond the automatically inflated homeowner policy valuation your possessions may well have done so. You may have added expensive electronics or furs, or may have high value personal items whose value increases with age, such as jewelry, and coin or stamp collections.
One important money saving factor in the cost of your homeowner policy is that most insurance carriers give 2 to 15 percent discounts on homeowner safety and security equipment and products such as dead bolts, grates on windows, and smoke or burglar alarms. Securing your home, however, must take personal safety into consideration. What you don't want to do is develop such a homeowner fortress that you cannot escape in the event of a fire or another in-home emergency.
Burglars are most likely to avoid your home however, if you light it up, if breaking into your home is time consuming or noisy. In fact, homeowner research has proven that burglars do not attempt to break into houses that would take them more than five minutes to enter.
Protecting Your Property | Property Insurance Is A Must
Property And Casualty Insurance Trends
Recent world events have instilled a sense of fear in anyone who turns on the television or opens a newspaper. People are more aware of their vulnerabilities, and more interested in purchasing insurance. The irony is that the same disasters, disease and acts of war have created a negative trend in the property and casualty insurance industry, to the point where these types of insurance are more expensive and more difficult for consumers to obtain.
The property and casualty insurance industry posted a $7.9 billion net loss in 2001. According to the Insurance Services Office (ISO) and the National Association of Independent Insurers (NAII), this is first time that the industry has ever reported a net loss. Experts predicted a negative 2.7 percent return rate for property and casualty insurance, almost 6.5 percent lower than the return rate of the year 2000.
These losses have caused a number of property and casualty insurance companies to cut back in an effort to economize. One step taken to reduce losses was to avoid adding any new property and casualty insurance policies. The insurers have also purposefully stopped updating or renewing existing property and casualty insurance policies. As a result, the premium price of property and casualty insurance policies has increased.
A number of factors are said to have caused the property and casualty insurance problem, including acts of terrorism, natural disasters, economic turmoil, and even mold.
The headline of one trial lawyer publication, "Mold is Gold", indicated that recent court decisions against insurers had jeopardized profitability of the property and casualty insurance industry. Invasive mold was recognized as the latest household hazard, and property and casualty insurance policyholders were cashing in with lucrative lawsuits. A well-publicized Texas lawsuit resulted in a staggering $32.1 million decision -- extremely profitable for the owner, potentially devastating for the property and casualty insurance industry.
The terrorist attacks of September 11 greatly contributed to the negative impact on the property and casualty insurance industry. It has been reported that property and casualty insurance claims related to the events of September 11 totaled as much as $70 billion. The same event has also caused the decline of the stock market, adding to the insurance industry’s downward trend.
This negative impact has also had a detrimental effect on the real estate industry, where property and casualty insurance is essential. Property and casualty insurance coverage is essential when applying for a conventional, government-assisted and commercial mortgage; without it, lending companies will reject the mortgage application. Therefore, the real estate market cannot function properly if this type of insurance is more expensive or less accessible. In real estate, mortgages are paramount in closing the vast majority of sales. Without property and casualty insurance, there won’t be any mortgages, and sales in the real estate market will plummet. Moreover, without property and casualty insurance coverage, homeowners would find it difficult or impossible to maintain their mortgage obligations. Lenders would be forced to foreclose on the property, or subject the homeowners to expensive lender forced-place coverage.
No one can contest the devastating personal consequences of natural disasters, acts of terrorism and disease. The insurance and real estate industries are two examples of how these events have had a negative impact on our economy as well.