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Tips for Plugging the Holes in Your Homeowners Insurance

By Compuquotes Team on June 18th, 2008

Think you've got all the bases covered when it comes to your homeowners' insurance? Think again. There are some very common sources of damage that are not generally covered by standard homeowner insurance. Here are just a few perils that could cost you thousands, and what you can do to help cover the gap between what your insurance covers and what you can pay out of pocket.

  • Doggie Damages

Your homeowner or renters policy will usually cover personal liability if your dog bites or injures someone, as well as damage done to another's property by your pooch. Most insurers balk at covering the bad boys of the canine kingdom, however. If you own a breed of dog with a reputation for aggression, your standard homeowner policy isn't likely to pay out if your pooch takes a nip of the mailman's calf. The most commonly excluded breeds are Rottweilers, Pit Bulls and Chow Chows, but you should check with your insurer about other 'guard dogs' as well.

What to Do: One way to get around this is to purchase a separate umbrella policy to cover personal liability for your house and car. The umbrella policy will cover liability for damages caused by your car and 'house' above the limits of your homeowner and car insurance policies. An umbrella policy that covers up to $2 million in liability coverage will cost about $300 a year. When you consider the costs you could pay if your dog bites a neighbor's child, it's a small price.

  • Flood Follies

As many homeowners have learned to their dismay in the last few years, a standard homeowner policy does not cover damages from flood. Most insurers define "flood" as "general or temporary condition of partial or complete inundation of normally dry land area from the overflow of inland or tidal waters, or surface waters from any source". Flooding includes water from melting snow, an overflowing creek or nearby lake, or a river breaking through its dam.

What to Do: If rising waters are a concern in your area, flood insurance is a necessity. You can purchase a flood insurance policy through your local insurance agent. In a high risk area such as a coastal plain or a low-lying inland area with many lakes and streams, go for a high coverage policy. A $2,000 premium will provide the maximum coverage of $250,000 for your home and $100,000 for your property.

  • Creeping Crud

Rising health concerns have alerted homeowners nationwide to the risks of mold in their homes. Mold arises from damp conditions, and often hides inside walls and under carpets. It's a health hazard, and can be expensive to abate. The rising number of claims for mold remediation due to widespread flooding over the last few years has prompted many insurers to reduce or drop coverage for mold remediation from their homeowner policies.

What to Do: Check with your insurer to make sure that you're covered for mold remediation. If not, and if you live in a humid area where mold can be a problem, invest in a special rider to provide coverage for a serious health problem that could make your home uninhabitable.

Two other common uh-oh moments for homeowners happen when they realize that their insurance won't pay the full cost of replacing a single expensive item, and when they realize that their estimated 'replacement' cost won't cover the cost of rebuilding.

What to Do: Insurance policies usually cap the single item replacement costs at $500 to $1,500. That won't put a dent in replacing your engagement ring, or that spiffy new $3,000 computer. There are two solutions. The first is to pay for a higher single item cap. The second is to purchase a rider on your insurance policy to cover specific items at their full value.

Many advisors will tell you to be sure you are insured for "replacement cost" for your home, or that it's covered for its current value. This is poor advice. Instead, insure your home for rebuilding cost. In many cases, especially with older homes, rebuilding your home will also mean making sure that the structure meets all current codes for building, and that can make it far more expensive to rebuild than to buy an existing home.

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