Do Not Put Off Your Insuring Engagement Ring

An engagement ring is undoubtedly an expensive piece of jewelry, and you should treat it as such by insuring it properly. Think your homeowner’s insurance will cover it? Think again. (You do have homeowner’s insurance, right?)

“While homeowner’s insurance covers a lot of things, it doesn’t provide adequate coverage for jewelry,” says Kevin Craiglow, a spokesperson for Nationwide Insurance, who explains that most insurance policies cover all jewelry worth up to $1,000. Unless you’ve got a teeny tiny rock on your left hand, you’re going to need extra coverage.

Craiglow recommends getting a separate jewelry policy, which some companies call an endorsement and others call an insurance rider. Both provide additional coverage for your engagement ring.

Before you can get an endorsement or a rider, you need to know exactly how much your ring is worth so should it be lost or damaged, the insurance company will know its replacement value.“Most reputable jewelers offer appraisals for a small fee,” says Craiglow. In many cases, the jeweler who originally sold your fiancé the ring will have offered to appraise it before it left the shop. In addition to providing a “current and accurate appraisal of the engagement ring,” says Craiglow, insurance companies will also want a description of the ring—carat weight, metal used, and so on—and a photo of it for their files.

Riders or endorsements add only a nominal amount to a current insurance policy and are well worth the expense because they offer both protection and peace of mind.

Who Pays for Falling Trees?

During a ferocious hurricane, one of the trees on Joan Fletcher's property came crashing down on the house of neighbor, Mark Tyson. Whose home insurance pays for the damage?

The answer may surprise you: Mark's Generally, the rule is that the property owner whose house has been damaged by a tree is the one who files the claim with the insurance company. As long as the tree was in good health, and no one could have predicted its fall, then Joan is off the hook. Since in this case, the tree fell down on Mark's house because of a hurricanean uncontrollable natural disasterJoan can't be held responsible.

But what happens when a tree falls down because it was damaged of diseased? Then the situation becomes a lot more complicated. In this case, the property owner can try to hold the tree owner liable for the damages. If the property owner does sue he tree owner, then the tree owner's insurance policy will pay for the defense and the damages, up to the policy limit.

So what should you do if you suspect that your neighbor's tree is damaged and is in danger of falling on your house? The best plan is to have qualified person inspect the tree. If your expert determines that there is a problem, then he or she should write a letter to the tree owner, return receipt requested. This way, if the tree owner doesn't do anything to take care of the problem, and the tree does fall on your house, you're in the best shape to win a case against the tree owner.

If you're the one with the potentially problematic trees, then you should do everything possible to protect yourself against an expensive lawsuit from your neighbor. Have your trees maintained or examined each year, and consider taking them down if the expert finds a problem. If you don't want to take them down, then protect yourself with an umbrella policy that provides secondary coverage for legal liability, well above the homeowner's policy. This way, if worse comes to worsethe tree falls, and your neighbor suesyour insurance company will be covering the damages.

Tips for Taking Inventory

Set aside one day to go through your home and list everything you might want to insure. Think about what you would need if a fire consumed everything you had. What would you have to replace to restart your life? If you can't set aside a full day, do it in a couple of evenings. Take your inventory room by room. Don't forget what's in the closets, drawers, and under the bed.

Here are some tips for taking inventory

* Take pictures of each room. You might want to photograph specific items that are valuable. Consider using a video camera for taking inventory. (Don't forget to include the camera in the inventory!)

* List the things in your closets and drawers, and items stuck under the bed or inside linen cheats. Make special note of jewelry and expensive gear you might use for skiing or other special occasions.

* List as many specifics about the items possible. Include serial numbers, the size and make of appliances. and any special features.

* List how much you paid for the item and when you bought it. If you have receipts, attach them to your inventory.

* Update your inventory list every year. Better still, when you purchase something, just add it and the receipt to the inventory list.

* Keep your inventory list in a safe place such as a fireproof container or in a safe deposit box. Your paper list does you no good if it is reduced to ashes in a fire, or if the thief steals the strongbox along with your other possessions.

Don't Overinsure for Your Home

Keep in mind that when you purchase full value replacement cost insurance, your premium is based on the insurance company's appraisal of the value of your house. If you think that their appraisal is too high, you can dispute that. For example, if you purchase a home for $200,000, the insurance company is going to want to sell you $200,000 in homeowner's insurance. The reality is that you've really paid for the house and the property that the house sits on. If the house came along with two acres of property, then you may have actually paid $125,000 for the house and $75,000 for the property. In that case, your house may only cost $125,000 to rebuild and you should only have to pay for a $125,000 replacement cost policy.

If you think you are being asked to pay for more coverage than is necessary to replace your home, check the terms of your mortgage before attempting to dispute it banks usually require a minimum amount of coverage. If you still believe less insurance will be adequate, point this out to the bank and get it confirmed by an appraiser for the insurance company writing the policy. You have reality on your side. That's because the insurance company will not insure your home for more than it would cost to replace. So get the insurance company to provide the appraisal. If you still are not satisfied, ask two more appraisers to value your home. Ultimately, it is not you or the bank who decides the value of your home. It is an appraiser.

Protecting Your Things in House

A typical homeowner's policy covers only some of the value of your belongings. Normally, coverage is equal to 50 to 70 percent of the value of the house. For example, if you insure your house for $100,000, your belongings will be insured for $50,000 to $70,000, depending upon your insurance company. You can always add to the coverage for your belongings if you pay a higher premium. So, if you own a lot of valuable things that are worth more than $70,000, you will want to consider increasing your belongings coverage proportionately.

The next step is to decide whether you want a policy that covers actual cash value or one for the replacement value of your belongings. Just as with your house, you'll probably be better off with replacement value, although it does cost a little more.

Typical homeowner's policies cover actual cash value. Unfortunately, you may be in for a big surprise when you file a claim because the payout will probably be significantly less than the cost of replacing the item.

Let's say a windstorm lifts a tree from your front yard, blows it through your living room window, and destroys the sofa you bought five years ago for $2,500. You're not worried, though, because you have homeowner's insurance. But if your belongings are covered for cash value, the insurance company values your five-year-old couch at whatever it's worth today, or rather, what you could have sold it for just prior to it being damaged. This is called depreciation.

Depreciation is the decrease in the value of something caused by the object's use. After a certain number of years, the thing may have no value according to the insurance company even though it would cost you a considerable amount to replace it.

Look at that $2,500 sofa. The insurance company may say that your sofa had a "useful life" of five years. So each year, it is worth one-fifth (or $500) less than the year before. After three years, the sofa is deemed to be worth only $1,000. They arrived at this value after doing this simple calculation:

$2,500 minus the depreciation (which is $500 times three years or $1,500) equals $1,000. So all you'd get for that couch is $1,000.

However, if your couch were covered by a full replacement policy, the insurance company would have to buy you a new couch that is comparable in value to the couch you lost when it was brand new. Actually, they have a choice. The insurance company can cut you a check, but they also have the right to repair or replace the couch instead. A policy that pays to replace your belongings costs about 10 to 15 percent more than an actual cash value policy. Seriously consider going the replacement cost route. It may save you a lot of money when you have a claim.

The Basics of Homeowner's Insurance

The key to understanding homeowner's insurance is to cut through the jargon and answer the questions: "Just what am I insured for and for how much?" But first, let's look at some of the terms you need to learn.

· Replacement value refers to the amount it would cost to replace an insured item today. For example, if you insure your home for the full replacement value and it burns down, the insurance company needs to replace it. Period. So even if you've insured your house for $100,000 but construction costs have risen 25 percent since you purchased your policy, the insurance company will need to cough up $125,000 to rebuild your house.

· Market or cash value means the amount an insured item is worth on the market today. If you insure your house for market value, you need to periodically reassess this amount and adjust your insurance policy accordingly. The reason is that if your house burns down, the insurance company will give you the amount of cash specified in the policy. Take the house in the previous example. If the $100,000 insurance policy had been a cash value policy instead of a full replacement policy, the owner would only have received a check for $100,000 even though it would cost $125,000 to rebuild.

· Liability is the last concept you need to understand before building the residential portion of your insurance structure. Residential insurance covers your legal liability if someone is injured either on or off your property or in your residence. Liability is one of the most important protections you get with residential insurance. If your neighbor slips on your wet kitchen floor and sues you for negligence, or if you accidentally hit someone with a golf ball after a great tee-off, the liability portion of your residential insurance will cover your legal fees and any damages you must pay up to the amount specified in your policy. More on that later.

Cut Your Homeowner's Insurance Bill

In addition to shopping for the best rate for your homeowner's insurance and raising the deductible, there are a number of other ways you can lower the cost:

* Multiple policies. If you purchase your homeowner's, umbrella, and auto coverage from the same company, you may be eligible for a 5 to 15 percent discount on your premiums.

* Add home security. You can usually get at least a 5 percent discount for installing smoke detectors. Beware of overdoing the security thing, though. Some insurance firms will give up to a 15 to 20 percent discount for sophisticated sprinkler systems and burglar alarms connected to a local police, fire, or private security station. But these systems are not cheap. Compare the cost of installing and maintaining such systems with how much they will save. Often, you may find it's cheaper to raise the level of your coverage than to buy a $1,000 security system. But there are other reasons to install a security systemlike safety and peace of mindreasons that can't be measured in dollars,

* Stop smoking. Some companies offer small discounts, but remember everyone in the household must be nonsmokers. Some health insurance policies will cover the cost of quitting; some HMOs even offer a cash bonus if you quit!

* Home improvements. If you replace the old electrical wiring in your home or overhaul the plumbing, you may be entitled to a discount because your house has become more fireproof. But if you add a new room, you may have to boost your coverage because that will increase the replacement cost of the entire house.

* Age has its privileges. Some companies provide discounts to people who are over 55 years old and retired. Their reason is that retired people stay in their houses more than working people and can thus spot fires more quickly.

Insurance Products to Consider when Away from Home

It’s important for all the vacationers, business travelers, cottagers, and snowbirds, to consider the following insurance tips before travelling:

Travel Medical Insurance

Covers you for emergency hospital and medical expenses when out of the province. If an insurance company agrees to cover you for pre-existing conditions, you should get its agreement in writing.

Home Insurance

• Check your home insurance policy for the expiration date and for other "away" requirements. Many policies will cancel coverage if your property is left unoccupied or unattended for extended periods of time.
• Check coverage limits on valuables. Some policies contain limitations for loss or damage to these items if you are away for an extended period, or if you are taking the valuables with you.
• If you’re travelling in the winter, make sure you drain your home’s plumbing before you leave or arrange to have your home inspected on a daily basis by a competent individual to ensure that heat is maintained. Insurance companies won't cover damage that arises from the freezing of indoor plumbing.
• In the winter, arrange for someone to clear snow from your roof. Some home insurance policies do not cover roof collapse due to excess snow.

Automobile Insurance

• Check the effective dates of your driver's licence and validation sticker to make sure they don't expire while you're away.
• If you plan to rent an automobile, check with your insurance company, broker or agent to determine whether you'll need the supplementary insurance coverage offered by rental companies.
• If you plan to take your own automobile and will be out of the country for more than 30 days, be sure to advise your insurance company, broker or agent. Also make sure you have the proper coverage and meet driver’s licence requirements for the jurisdiction in which you'll be travelling.
• If you are leaving your vehicle at home and it won't be used by anyone, save money by suspending certain coverages from the policy, such as collision. Be sure to add the coverages back once you return.
  

When should I Start Looking for Homeowners Insurance?

A house may be the biggest investment you make in your life, so you’ll want to fully insure it against damage (by fire, wind, vandalism, earthquakes, floods, and mold, for example). A comprehensive homeowners’ insurance policy should cover the replacement value of your house and other structures, and partial replacement of valuable items of personal property like art and
computers.

But beware: So-called “replacement cost coverage” for your house pays you only a preset amount, so you’ll want to make sure that’s enough to cover your actual rebuilding costs. You’ll probably want some liability coverage as well, in case visitors to your property slip and fall or are otherwise injured.

Start shopping for homeowners’ insurance soon after your purchase agreement has been signed. Don’t make the mistake of putting this off until escrow is about to close—finding a good policy at a reasonable price is getting harder and harder, due to recent losses and clampdowns in the insurance industry.

The problem is particularly acute in states such as California and Texas, where expensive mold claims have pushed the industry into a state of panic. Homebuyers who have filed past claims for water damage (a precursor to mold) or who are buying a house with a history of mold problems may find themselves unable to get any insurance at all. Homebuyers with a history of making frequent claims on their insurance policies have similar problems. Some homebuyers now add a contingency to their purchase contract stating that the deal can be cancelled if they can’t find adequate insurance.

Shop carefully—and if you’re in a state with a troubled insurance industry, buy a policy with a
high deductible. This will lower your premium cost and prevent you from racking up a history
of claims that could endanger your ability to renew your policy or get future insurance.