Homeowner's Insurance
From the Nolo.com Real Estate Center
Get the basics on homeowner's insurance and the
importance of doing a home inventory.
Before finalizing a mortgage loan, lenders require homebuyers to purchase
hazard insurance to pay the lender in the event the house is damaged or
destroyed by fire, smoke, wind, hail, vandalism or another similar act.
Virtually all homeowners buy comprehensive homeowner's insurance, not
just the minimum required by the lender. In addition to covering the house,
homeowner's insurance protects furnishings and other personal items, as
well as any other structures on the property, such as a pool. Homeowner's
insurance also covers some types of personal liability -- if the mail
carrier trips over your kid's skateboard, your policy will pay for his
medical expenses and other losses.
You will want to purchase additional insurance if your house is in a
high-risk area for fire, floods, earthquakes or other natural disasters
or you have expensive art or business equipment at home. For more information
on homeowner's insurance, see
http://www.insure.com/home. This informative website provides a wealth
of consumer information, from choosing a basic policy to purchasing earthquake
or flood insurance to filing a claim. You can also check the websites
of individual companies such as State Farm or Allstate.
| Making a Home Inventory
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| If your home is struck by a burglary, fire,
flood, earthquake, or another natural disaster, an up-to-date
home inventory will make it easier to deal with police and
your insurance company. Without one, you'll have to create
a list of all your property from memory.
Fortunately, making a home inventory isn't an onerous task.
And doing so not only prepares you for possible losses --
it can help you prevent the loss itself. As you inventory
your possessions, you'll become more aware of their vulnerability,
and you can take steps to secure them.
Start by walking through your house with a pad of paper
and a still or video camera. Take pictures and jot down
a list of any items worth more than $50 or so. Go room by
room, and don't forget the garage, attic and basement. Be
sure to include jewelry, clothing, stamp or coin collections,
CD and record collections, silver, tools and electronic
equipment.
Then take a little time to formalize your inventory. Insurance
companies often supply inventory forms. Making and updating
an inventory can be even easier if you own a computer; Nolo's
Personal RecordKeeper software includes a complete
home inventory section.
Whatever your method, record key information about each
item:
- Complete description, including whether or not it's
marked with an ID number such as your driver's license
number. (You can buy an electric engraving pen for $20
or so at a hardware store.) Record the make, model and
serial number, if any; this will help you justify the
estimated value of the item to your insurance company.
The ID and serial numbers help police identify stolen
goods.
- Location. This will help you identify what you've lost
if only one area, such as the garage, is hit.
- Location of ownership documents, receipts, owner's manuals
and repair bills.
- Purchase price, current value and replacement cost.
For most items, your best estimate will do. For antiques
or other difficult-to-price items, such as a stamp collection,
you may need a professional appraisal.
Keep your written and photographic inventory in a safe
place, such as a fire-resistant file cabinet, the freezer
or a safe deposit box. Keep at least one copy away from
home. If you take a long vacation, give a copy to a friend
or neighbor; that way, if your house is broken into while
you're gone, they can determine what's missing and report
it to the police.
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