My husband and I recently started doing a little research about what our available options were in regards to insurance. When we visited our insurance agent, we learned that we needed to make some changes to our existing car insurance policy, which was ready to be renewed. This was taken care of right away. The next thing we needed to think about was homeowners insurance.
We already had a homeowners insurance policy with the insurance company we were speaking with. This is because we own a home, and were required to purchase some form of homeowners insurance when we first became homeowners. Even though we have had this policy for a few years, our agent was able to teach us things we did not know about homeowners insurance.
She suggested that it is a good idea to make sure that you have purchased enough homeowners insurance to cover the remaining portion of your mortgage. Why? Let’s assume that there is a fire, and your home, (and everything in it), is completely destroyed. Nothing can be repaired or recovered in this hypothetical example. You don’t want to end up having to pay off the rest of your mortgage, a process that can take several years, on a home that it has become impossible for you to live in.
Homeowners insurance is also supposed to cover the replacement of the property in your home, in case of disaster or theft. We learned that our insurance company will pay the cost of replacing an item with a comparable version of it, instead of giving us the actual cash value of the item itself. This is reassuring.
We learned that there is a way to prove that you did, in fact, own the items that you are asking to be replaced. The insurance agent suggested we take photos of all our property, (or, at least the things that would be really expensive to replace). Next, we should collect up the receipts for these items and scan them into a digital form. We don’t have the receipts for everything. Our refrigerator came with the house, and so did the stove. Hopefully, a photo of those things will do.
It is a good idea to take the photos, and scanned images of the receipts, and store them someplace outside of your house. This way, if something happens, such as the hypothetical fire example I have been using, you will still be able to show the insurance company the proof it will require.
Image by Doug Shick on Flickr