Category: Challenge Activities
Don’t forget attics, basements, and garages!
Creating a household inventory can be a daunting task. In addition to the rooms of our homes where we spend the most time — kitchen, dining room, family room, living room, and bedrooms — many of us have attics, basements, and garages filled with family treasures, household files, and tools.
In addition to being a record of all possessions accumulated over the years, a household inventory is critical to getting insurance claims settled quickly after a disaster. It can also be used to verify losses for income tax returns.
A complete and up to date household inventory is the basis for buying the appropriate amount of insurance coverage. The relationship between updating your household inventory and maintaining appropriate insurance coverage means that regularly reviewing your insurance coverage goes hand-in-hand with updating your household inventory.
Some important things to know about your policy:
Is your home and its contents insured for at least 80 percent of its replacement cost, rather than depreciated value? If not, insurance will not cover the full cost of rebuilding after an insured loss.
What disasters are covered? While the exact coverage will vary from policy to policy, a standard policy covers fire, lightning, windstorms, hail, freezing of plumbing or pipes, damage from weight of ice, and volcanic eruptions (with exceptions).
What disasters are not covered? Your policy will also spell out the disasters you are not insured against. Depending on your geography, as well as your insurance carrier, common exclusions are earth movement, flooding, and sewer back-up.
Words for Wednesday
One of the challenges for this week is to review your auto and homeowner’s/renter’s insurance. Insurance terminology can be confusing so here are few key terms to know.
Premium — the price an insurer charges a policyholder for insurance.
Insurance policy — a contract between an insured and an insurer in which the insured agrees to pay a premium in return for the insurer’s promise to pay for certain covered losses during the policy period.
Exclusion — a potential loss that is expressly excluded from coverage by an insurance policy.
Rider — addendum to an insurance policy that requires payment of additional premium in return for additional specified insurance coverage.
Deductible — the amount of loss that must be paid by an insured before the insurance company will pay any insurance benefit.
As you review your policies, make a note of what disasters are covered as well as any types of disasters that you are not insured for. Learn more about reviewing your insurance coverage in Get Financially Prepared: Take Steps Ahead of Disaster
Definitions from: Bajtelsmit, V. (2006). Personal Finance: Skills for Life. Hoboken, NJ: Jonh Wiley & Sons, Inc.
Household inventory, why is it important?
