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| Adrian Mastracci, president of KCM Wealth Management, says “Review your property insurance coverage annually. Ask yourself where you are most vulnerable, what you can do about it, and what costs you may incur." |
For Immediate Release
Vancouver, BC (September 26, 2005): The devastation caused by hurricanes Katrina and Rita is a reminder that a checkup of your property insurance coverage may be long overdue.
Benjamin Franklin once said, “An investment in knowledge always pays the best interest.”
Adrian Mastracci, investment counsel at Vancouver's “fee-only” KCM Wealth Management, comments, “Many people don’t check their property insurance policies. All too often, they simply pay the renewal premium. This is one case where a little more knowledge could make a big difference.”
Insurance companies will incur some heavy payouts from the recent hurricanes. In the billions of dollars. That will likely change the availability of some coverage and the premiums.
Don't allow your property insurance coverage to hurricane your finances. It’s very easy be under insured. Often in one or more areas, without even knowing it.
A substantial property loss may devastate one’s financial resources. Losses may typically occur on a home, condominium, rental property or vehicle. A variety of business related coverages may also bring hazards to financial health.
Therefore, take matters into your hands and embark on a little risk management. Here is the overview for your property insurance checkup:
Valuations for buildings and contents
The most difficult exercise is to determine the “replacement cost” for buildings and contents. They can vary widely all across the country. Insurance companies have adopted an appraisal like format to collect data about your property. This more accurately estimates replacement costs.
Anyone who has undertaken renovations, or owns a heritage home, is advised to review and update the valuations. Similarly, the value of a home custom built with top-of-the line materials is different then a standard quality home.
The replacement cost for all contents is a matter of itemizing the articles. Once you've done it the first time, it gets easier to update the long list annually. Insurance companies have lists you can start with.
Specialty items, such as jewellery, works of art, coins, stamps, collectibles or vintage automobiles, may require appraisals. These are covered by riders added to the policy, along with added costs.
Condominium owners should ensure that the strata corporation has a handle on the replacement cost of the entire building. Your portion of a payout should approximate realistic values. Business owners ought to review values for the business premises, inventories, all equipment and other materials.
Review limits and deductibles
Start with the third-party liability for each property, vehicle and business location. A minimum of 1 million is suggested. Although, coverage in the 2 to 5 million range may be more appropriate. Say, for a swimming pool or vehicle.
The maximum third-party liability on most policies is generally 2 million. An umbrella policy can increase your limits. For example, you may reduce third-party liability coverage to 1 million on properties and vehicles. You then purchase a 4 million umbrella policy coverage for a total of 5 million.
Look upon liability insurance as a safety net that protects your assets from lawsuits. You don’t want to suffer a serious financial setback by inadequate coverage if someone trips and falls on your property.
Coverage for business interruption and rental interruption insurance may be appropriate. Particularly, for those who have financed the premises.
One area often overlooked it is the reimbursement of expenses incurred while a property cannot be occupied. Therefore, estimate the expenses you are likely to incur if, say, your home had to be completely rebuilt after a fire.
Cost is becoming a bigger factor. One way to reduce the increases is to consider higher deductibles. Premiums may also reduce by discounts for security systems, dead bolt locks, smoke alarms, and placing all your business with the same company. Seniors may also get a break on premiums.
Policy exclusions, earthquake and flood coverage
Most companies require a rider for earthquake and flood coverage. Your location and probability of occurrence will determine the premium. However, these are not inexpensive.
Make sure you understand the exclusions in your policy. Investigate whether damage from broken pipes or sewer backup is covered. Another is conducting business matters in your home.
The bottom line
Property insurance policies are not the easiest little devils to figure out. You’ll have to make an effort to understand the risks covered. Not to mention the language in your policy.
Review your property insurance coverage annually. Ask yourself where you are most vulnerable, what you can do about it, and what costs you may incur.
Having a good long chat with one or more property insurance agents is time well spent. An investment in knowledge.
You want the most comprehensive policies you can afford. Don’t skimp on your coverage.
Protecting your property from turning into a financial disaster deserves your full attention.
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