Don't skimp on homeowners insurance

Insurance coverage is usually not at the top of the list subjects you like to discuss at your favorite social event or while watching football with your buddies. However, when you need it you want it to be right.

Unfortunately, sometimes it takes a real tragedy like the 2007 California fires for people to realize they did not have the right coverage when they needed it the most.

This column addresses some of the more common questions related to protecting most people's largest investment: their home.

Q: How do I determine what dollar amount my home should be insured for?

A: Many times homes are insured for the amount of the mortgage, the current market value or the purchase price. Yet, using any of these formulas may not provide the coverage you should have and can put you at a serious risk of underinsuring or possibly over insuring your home.

This is because all three of these amounts have little to do with what it costs to rebuild your home. We have seen that many people that have been affected by the San Diego fire were not carrying enough coverage. Make sure your insurance company can provide a satisfactory answer about how it determines coverage recommendations.

A computerized program that takes into account all of the nuances of your particular home is best. No two homes are identical, and therefore should not be insured the same way. Talk to an agent who will take time to properly assess the re-building cost of your home.

Q: What kind of deductible should I carry?

A: Your homeowner’s insurance policy should not be looked at as a home warranty policy. Claims on your homeowner’s policy can drastically increase your rates. After two or more claims, your company may drop your coverage, and you may then find yourself uninsurable with other companies because of your excessive claims.

Your homeowner’s policies are designed for catastrophic losses. Therefore, choose a higher deductible, put away the premium savings from the higher deductible and pay for the small losses yourself.

Q: Do I need to notify my agent if I add any new additions to my home, or will my homeowner’s policy automatically adjust itself for new additions?

A: Circumstances change and it is never wise to assume that your insurance company will adjust your policies to accommodate these changes. Your agent should be sitting down with you at least once a year to make sure you are carrying the proper coverage, and are qualifying for the best discounts the company may offer.

Q: How much coverage should I carry for my valuables in my home?

A: Standard homeowner’s policies offer maximum amounts of coverage for jewelry, guns, furs, electronic equipment, etc. It is recommended that you provide a list, pictures and an appraisal for any personal items that may need more coverage than the standard homeowner’s policy provides.

Your agent can tell you specifically what is covered and what is not. Be sure you know.

Q: What other structures are covered on my homeowner’s policy?

A: The policy covers other structures on the residence premises set apart from the dwelling by a clear space (unattached), including structures connected by only a fence or utility line. Business and farm structures are not covered. Again, it is recommended your agent visit your property so you can both decide what coverage amounts are best suited for your particular situation.

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Bill Murray is an agent with Farmers Insurance Co., 900 W. 8th St. He can be reached at 782-2991 or wmurray@farmersagent.com.