Taking out the correct property and casualty insurance cover may not be particularly high on your list of financial priorities and, compared with things like investment decisions and estate planning issues, questions about the language in your homeowners plan could seem hardly worthy of consideration. However, the more successful you are, the more involved your asset-protection requirements are likely to be-and the more you have to lose. Suppose, for example, that in addition to your primary residence-a historic home-you also own a house at the beach and a condo in the city.
For example, let us assume that your properties are in 3 different states, the value of your collection of Abstract Expressionist paintings has risen quickly and you recently volunteered to serve as a director of of a charity. Virtually every aspect of this present situation could cost you dearly.
Insurance laws vary widely from one state to the next, different sorts of property require specialized coverage and art collections and other unique items may prove difficult to fully protect. Meanwhile, serving on the board of a non-profit organization might subject you to additional personal liability.
Protecting yourself and your family might mean buying additional coverage, although more insurance isn't necessarily the answer. Instead, it's important to review all of your needs, consider specialized policies or policy options and coordinate your insurance cover with other facets of your financial situation.
Here are 6 problems which could turn out to be extremely costly.
1. Having gaps in homeowner's insurance coverage.
Homeowners need to look at their cover on a regular basis so as to keep up with growing replacement costs. But, insuring different kinds of home in different locations poses additional challenges. If you take insurance cover from more than one carrier then you might be faced with contrary limitations, rules, and policy renewal dates. For instance, the liability limit on the policy for a second home could fall short of the minimum on an excess liability policy intended to complement the insurance on your primary home and you may well wind up being responsible for coming up with the difference.
2. Brushing Aside the unique characteristics of your property.
One of the perks of wealth is having the means to own wonderful homes but one of the drawbacks is that These might be difficult to insure adequately. Standard homeowner's coverage is not going to pay for the materials and craftsmanship needed to rebuild that 19th century showplace which you've lovingly restored. Coastal homes might well face hurricane damage, while a home in the mountains of California might be subject to wildfires or earthquakes.
3. Under insuring art and collectibles.
Normal homeowner's policies place a limit on coverage for the loss of hings like antiques, furs, and other valuables. And while you could arrange additional cover, insuring the true value of an art collection will usually mean buying a specialized plan which addresses several critical issues.
4. Omitting to insure employees.
When an individual works for you or your family as, for instance, a nanny, landscaper or personal assistant you could have a liability for medical expenses and lost wages if that worker is hurt while at work. Various states require household employers to pay into a workers compensation fund while in other states this is optional. However, providing such insurance may be obligatory for ensuring your financial well being.
5. Neglecting your liability as a member of a board of directors.
Some form of excess liability coverage might help protect you if you are sued as a director of a nonprofit's board or, for more comprehensive protection, you may want to consider taking out special directors liability insurance.
6. Failing to get regular plan reviews and updates.
Your finances are not static and neither are your insurance needs. The value of a collection might increase, home renovations may mean an increase in the value of your home and the re-titling of assets as part of your estate plan or as a result of divorce, a death in the family, or the birth of a child may require changes to your plan. Even lacking any significant events, you will undoubtedly need a comprehensive review of your insurance cover at least every two years.
For example, let us assume that your properties are in 3 different states, the value of your collection of Abstract Expressionist paintings has risen quickly and you recently volunteered to serve as a director of of a charity. Virtually every aspect of this present situation could cost you dearly.
Insurance laws vary widely from one state to the next, different sorts of property require specialized coverage and art collections and other unique items may prove difficult to fully protect. Meanwhile, serving on the board of a non-profit organization might subject you to additional personal liability.
Protecting yourself and your family might mean buying additional coverage, although more insurance isn't necessarily the answer. Instead, it's important to review all of your needs, consider specialized policies or policy options and coordinate your insurance cover with other facets of your financial situation.
Here are 6 problems which could turn out to be extremely costly.
1. Having gaps in homeowner's insurance coverage.
Homeowners need to look at their cover on a regular basis so as to keep up with growing replacement costs. But, insuring different kinds of home in different locations poses additional challenges. If you take insurance cover from more than one carrier then you might be faced with contrary limitations, rules, and policy renewal dates. For instance, the liability limit on the policy for a second home could fall short of the minimum on an excess liability policy intended to complement the insurance on your primary home and you may well wind up being responsible for coming up with the difference.
2. Brushing Aside the unique characteristics of your property.
One of the perks of wealth is having the means to own wonderful homes but one of the drawbacks is that These might be difficult to insure adequately. Standard homeowner's coverage is not going to pay for the materials and craftsmanship needed to rebuild that 19th century showplace which you've lovingly restored. Coastal homes might well face hurricane damage, while a home in the mountains of California might be subject to wildfires or earthquakes.
3. Under insuring art and collectibles.
Normal homeowner's policies place a limit on coverage for the loss of hings like antiques, furs, and other valuables. And while you could arrange additional cover, insuring the true value of an art collection will usually mean buying a specialized plan which addresses several critical issues.
4. Omitting to insure employees.
When an individual works for you or your family as, for instance, a nanny, landscaper or personal assistant you could have a liability for medical expenses and lost wages if that worker is hurt while at work. Various states require household employers to pay into a workers compensation fund while in other states this is optional. However, providing such insurance may be obligatory for ensuring your financial well being.
5. Neglecting your liability as a member of a board of directors.
Some form of excess liability coverage might help protect you if you are sued as a director of a nonprofit's board or, for more comprehensive protection, you may want to consider taking out special directors liability insurance.
6. Failing to get regular plan reviews and updates.
Your finances are not static and neither are your insurance needs. The value of a collection might increase, home renovations may mean an increase in the value of your home and the re-titling of assets as part of your estate plan or as a result of divorce, a death in the family, or the birth of a child may require changes to your plan. Even lacking any significant events, you will undoubtedly need a comprehensive review of your insurance cover at least every two years.
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