BY SHARON GITTLEMAN
Imagine a tornado swirling down from the heavens and sweeping away your home and everything you own.
While you'll never replace some precious mementos, just one step can make the difference between your ending up on the street and having the chance to make a fresh start.
Homeowners insurance is a vital part of protecting yourself and your family.
Defending your home from losses arising from natural catastrophes isn't the only reason to by these policies, said insurance maven Bryan Ede.
Underinsuring is one of the biggest mistakes a homeowner can make, he said.
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You don't want to scrimp when it comes to liability – protection against lawsuits resulting from someone being injured or killed on your property.
"You could really put yourself in a jam," he said.
Trimming premium costs by lowering your liability coverage could result in hundreds of thousands of dollars drained from your pocket thanks to a court ruling.
"If you're sued for a dog bite, or slip and fall or someone gets hurt at your address, you could lose your home and your savings and your wages could be garnished until any judgment is paid off," he said.
Homeowners insurance doesn't have to be a major paycheck drain.
"It coincides with the value of your home and where it's located," he said.
There are lots of things you can do to keep premium costs low.
Some agencies offer reduced premiums for people who have stuck with their insurers for a long time. Other discounts are available for retirees and seniors.
Adding safety features to your home, such as alarm systems, or reinforcing the structure of your house to protect it from bad weather could also lead to lower premium costs. Check with your agent to find out if discounts are available.
Higher deductibles can be another money-saver.
The most important thing to remember is to read and understand your policy. While it may be hard to slog through insurance language, it's a step you'll ignore at your peril.
"The biggest thing is to ask, 'Will I be covered if…?' Ask what coverage would require an extra policy over homeowners," he said.
That's a question that's especially important if you own jewelry, furs, antiques or other valuable collectibles – a supplemental policy may be necessary to protect your belongings.
Before you even ask for an estimate, you'll want to do an inventory of all your possessions in your home.
"Add up everything, even things like sheets and towels," he said.
You need to know exactly what type of protection you're purchasing with your policy – especially if you are gay or lesbian.
"If your partner is not on the title of your house, then his loss would not be paid by the insurance company. The check gets written to the person who's on the policy," said Ede. "If the contents aren't owned by the homeowner then their stuff isn't covered."
Your partner needs a renter's policy to recover any money for losses to their personal property, he said.
Another thing to decide is whether you want a policy that pays you back for the actual value of your loss or refunds your replacement cost.
"An actual cash value would only give you what that stuff is worth after depreciation," he said. "Replacement cost is how much it will cost to replace that 10-year-old refrigerator."
Don't forget – it's important to review your policy each year to make sure you don't need more or less coverage.
