Guide to Homeowners Coverage | Adviser Investments

Homeowners Coverage: What You Need to Know

It isn’t all doom and gloom out there. The summer is here and, along with it, some great weather. Now’s the time that homeowners begin to roll up their sleeves and get on with home improvement projects. But before you put hammer to (or through) drywall, we’d like to suggest reviewing your homeowners insurance to make sure you have adequate coverage.

Homeowners policies typically incorporate three major types of coverage: Home (covering loss or damage to the structure), contents (loss of your personal property) and liability (legal fees and judgments). Here are a few questions to think about:

Are you insuring your home and the land it’s built on? You shouldn’t base your replacement coverage on your home’s appraised value; this will include the value of your land. To get a true estimate of the value of your physical home, base your estimate and coverage level on recent per-square-foot replacement costs in your area. This information should be available from your local homebuilders’ association.

In the event of a total loss, will your insurance cover the cost of replacing all your personal property? As you’re reading your policy, determine whether the contents of your home are insured under “replacement cost” or “actual cash value.” If your favorite armchair gets ruined, actual cash value will pay you what it’s worth today. Replacement cost coverage will replace your chair with a new one of like kind and quality. We recommend the latter option.

Is your liability coverage sufficient and do you have other coverage that might apply? Have you installed a swimming pool or fire pit since you last reviewed your liability insurance? You might want to consider raising your coverage. Many homeowners who also own and insure cars or boats purchase a “liability umbrella” that can provide blanket coverage for any liabilities you might be subject to. Note that you may have to increase your underlying liability coverages through your homeowners or car insurance when purchasing an umbrella policy. Why? These policies typically require a certain minimum underlying coverage level; if you are below that, you will need to increase it before you can buy the umbrella insurance.

What isn’t covered in your homeowners insurance? Insurers offer both “open perils” and “named perils” policies. A named perils policy only covers losses that are listed in the policy. Open perils policies insure against all losses except for those that are specifically excluded in the policy. If you have the latter type, it’s important to review those exclusions. You may find that losses due to common hazards (termites, mold) or natural disasters (floods, earthquakes) aren’t covered. If you’re living in an area where you are at risk for one of these natural occurrences, consider separate insurance.

If a review of your documents has turned up some deficiencies or you aren’t clear on what is or is not covered, feel free to contact your wealth management team at Adviser Investments. We can advise you on what to look for in your documents and what you may wish to discuss with your insurance agent if you determine your coverage isn’t sufficient. The points above touch on some key items but certainly aren’t exhaustive. We’re happy to help you comb through the fine print.

About Adviser Investments

Adviser is a full-service wealth management firm, offering investment managementfinancial and tax planningmanaged individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. To see a full list of our awards and recognitions, click here, and for more information, please visit or call 800-492-6868.

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