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Sufficient Homeowners Insurance? 

Here are some tips to help you decide if you have enough coverage.

Many consumers only think about homeowners or renters insurance when buying a home, refinancing a loan, or signing a lease. If you’ve lived in the same place for several years, like many of us have, a potentially costly mistake to avoid is allowing your homeowners policy to renew each year without a thorough review.

A typical homeowners policy covers the structure of the house, along with its contents, as well as other owned, detached structures on the premises. Condominium owners can buy a different policy that protects their belongings, along with the interior structural elements of their unit. Renters policies are designed to cover items such as electronics, furniture, appliances and clothing. Each of these policies also protect against personal liability in the event of a lawsuit.

To ensure you’re adequately protected, here are some questions to ask when reviewing your coverages:

Did you make any major home improvements, like upgrading your bathroom or kitchen, or building an addition? Did you purchase any new items for your home, like a smart TV or new computer? Any major purchases or changes to the structure of your home should trigger a review of your policy.

Have any circumstances changed that may require you to increase your liability coverage? For example, adding a swimming pool in your backyard, either inground, above ground or even a family-size, inflatable pool, can create a major liability exposure, which may warrant a higher limit of coverage. Did you bring a new pet into your home? Even the smallest, mildest animals can inadvertently harm someone, potentially resulting in a lawsuit against you. Typical policies offer liability limits up to $500,000. If you don’t think that’s enough coverage, a personal liability or “umbrella” policy can be purchased separately with even higher limits.

Have you obtained additional jewelry? Coverage for jewelry is provided on a homeowners policy for covered losses and, in certain situations, is limited to $1,500. You can purchase an endorsement for your policy that will provide more comprehensive coverage, and will insure specific pieces of jewelry without the $1,500 limitation. Coverage would be provided up to the appraised value of each piece.

Have you considered flood and earthquake protection? While floods and earthquakes aren’t as prevalent in New Jersey as they are in other parts of the country, they can – and do – happen here. Damage to your home caused by a flood or earthquake is not covered on a homeowners policy. However, flood coverage can be purchased as a separate policy through the National Flood Insurance Program, while an earthquake endorsement can be added to your homeowners policy.

Renewal is a great time to review your policy to determine if you have sufficient coverage. Remember, your insurance company or agent can also assist in helping you decide.

About the Author: Bill Morici is the director of the personal lines homeowners department at NJM Insurance Group.


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