Most Maine homeowners purchase insurance policies when they move into their homes. In addition to being a very important form of protection, mortgage lenders usually require homeowners to maintain adequate insurance for the life of their mortgage. While having a policy is a very important first step toward protection, a second step requires the homeowner to evaluate it on a regular basis.

This is the case because a change in circumstances may create any gaps in coverage. If you purchased your home two decades ago – or even at the downturn of the housing market – it is likely worth more now than it was then. Further, any renovations or upgrades may increase the value of your home by a little or a lot.

For instance, you may have insured your home for $200,000 when it was first purchased. After a passage or time, changes in the market, or subsequent renovations, your home may now cost $250,000 to rebuild. This would create a $50,000 gap in coverage and leave you with insufficient funds to rebuild and refurnish in the event of a total loss.

Here are some things to keep in mind in reviewing your policy:

  • Upgrades to a kitchen or bathroom, new kitchen appliances, or even new furniture can affect the cost to repair or rebuild your home. It is important to estimate the full cost of replacing furniture, appliances, and electrical and plumbing systems in determining your coverage.
  • A newly finished basement may not only increase the cost to rebuild your home, but it may also require additional coverage to protect the basement furniture and electrical and plumbing systems from water damage.
  • The purchase of outdoor equipment may trigger the need for additional coverage. Backyard grills, riding lawnmowers, and even snow blowers can be major investments, and homeowners should be sure that their insurance policies contain sufficient coverage to replace these items in the event of a loss.
  • Don’t forget about coverage for those new Christmas or Hanukkah presents. Your policy should provide standard coverage for your belongings, but this coverage may not be sufficient to insure those new golf clubs or diamond earrings.
  • You can include an inflation guard provision in your policy. This is a provision that gradually and continuously increases the insurance limit by a specified percentage over a specified time period (such as 3 percent every 3 months).

Here’s to good health and full coverage in the New Year!

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