Today, we're breaking down what homeowners insurance is and going over some ways that you can protect your most valuable assets.
What's up, everybody? It's your boy, Brandon Copeland, aka Professor Cope, and you are now tuned in to another episode of Cope'ing with Money.
I've been hearing a lot of stories recently about damage to people's homes – flooded basements, fallen trees, all sorts of things. And every time I hear those stories, I think to myself, "Phew! Thank God I've got insurance."
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For most people, your home is the largest asset that you own, and thus, the largest piece of your net worth. So it makes sense to protect it by buying homeowners insurance. Although we hope to never actually need it, there's always a chance that these incidents may occur. And if you're new to the insurance game, then recouping your losses can be a tedious and a frustrating process, trust me.
This time on Cope'ing with Money, I thought we'd go over some ways that you can get the most out of your homeowners insurance so you can stay protected and prepared.
What Is Homeowners Insurance?
What is homeowners insurance? If you're currently paying or financing your home, you'll likely have homeowners insurance already, as most banks require it as a condition of your mortgage. But if you're looking to purchase a home or just need a refresher, how does it actually work?
A typical homeowners insurance policy will cover the cost of replacement or repairs if your home is damaged in a storm or similar event. When these accidents do happen, you'll reach out to your insurance provider and file a claim (or, in other words, a basic summary of what was actually damaged) so that they can review it and plan to cover those costs.
There are some things that an average policy won't cover, such as damages by flooding or an earthquake. For additional coverage, you may have to purchase a separate policy. That's why it's important for us to take steps in advance to ensure we're making the most of our money.
Understand Your Policy
We have to understand our policy. When signing up, your insurance agent will tell you everything your policy covers and how your deductibles actually work. You'll also be able to see if you need to purchase more coverage for certain items.
For example, jewelry and technology are covered up to a certain limit. If you have expensive jewelry or home technology, you may have to ask your agent for additional coverage.
It's important to never ever ever assume we have coverage in a given area and to double-check with our provider prior to these incidents occurring. If you're purchasing insurance for the first time, make sure to ask questions and know exactly which losses you're paying for. And if you already have insurance, consider reviewing your plan and even upgrading if you deem it necessary.
Take Inventory of Your Home
Another helpful step to do before an accident occurs is to keep a running inventory of the major purchases in your home.
With all that goes into decorating and living in your home, it's easy to forget every single purchase, especially if you're a collector or have a few prized possessions. I recommend keeping a digital record of the major purchases in your home by taking pictures, keeping receipts, and making a spreadsheet or a running list.
You also want to upload this record to a cloud storage service and keep it updated regularly. This not only helps us remember all of our assets but also helps us back up our claim in the event of damage.
And while you're at it, make note of your location and your home itself. Are there any dead trees or broken chimneys that may be holding on for dear life and close to falling? Is there anything you can clean or remove to help protect your home from future damages?
Don't wait until an accident occurs to make sure you're covered. The best time to take inventory is now.
Be Honest, And Be Specific
Now that you've planned ahead, it's time to talk about actually filing your claim.
First and foremost, make sure you're being 100% honest with your insurance company. Some people may see an insurance claim as an opportunity to upgrade their standard of living, but if you're purposefully claiming items that weren't damaged or that you never owned in the first place, then I'm sorry to be the one to tell you: That's fraud. If the insurance company detects anything fraudulent, they may deny your entire claim, or worse, escalate the incident. Let's avoid any legal trouble and only claim what was lost.
But with that being said, make sure you're also being specific when it comes to your items. If you splurge on that high-tech robotic espresso machine, then don't just write "coffeemaker" on the claim. That's all you'll be compensated for.
This is another reason why it helps to save your receipts, but at the very least, including the time and location that you bought the item should help specify the cost.
Inspect Damage Thoroughly
Lastly, when filing the claim, let's make sure we're inspecting the damage thoroughly. While you may be distraught over your flat-screen TV short-circuiting, don't forget to check the sound system, the game consoles or the Fire Stick that you had plugged into it.
In case of a fire, flood, or other disaster, check the entire affected area. This includes rugs, lamps, furniture and appliances, and even things tucked away on shelves or in drawers.
Even if it's only worth $10 to $20, write it down. You've paid for the insurance. It's your right to use it to its fullest extent.
Cope's Final Thoughts
There's a lot of things to consider when picking the right homeowners insurance policy. Hopefully, this list gives you a couple of starting points and inspires you to take account of your home before disaster strikes.
Additionally, if you're living in an apartment, then you may consider getting renter's insurance, in which case, many of these same principles still apply.
As always, I encourage you to check out our Kiplinger.com page and find useful tips to help suit your exact situation.
Be safe, stay blessed. I'll see you next time on Cope'ing with Money. Peace.
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