Insurance

There are many kinds of insurance: homeowners, automobile, health, fire disaster, and others. Homeowners insurance provides financial protection against disasters for the owner of a home and even for people who rent an apartment, house, condomium, or other. A standard policy insures the home itself and all the belongings and furnishings inside. A package policy, homeowners insurance covers both damage to a person's property and the associated liability or legal responsibility for any injuries and property damage that person or members of that person's family cause to other people.

This also includes damage caused by household pets. Most damage caused by natural disasters is covered but there are three that are not covered by homeowners insurance: flood, earthquakes, and poor household maintenance. For any of these disasters, the person must purchase separate and additional policies. Also, maintenance-related problems are generally almost always the responsibility of the homeowner.

Within this general framework, there are many kinds of choices such as a limited choice policy, a basic policy, varied levels on that basic policy as well as separate policies specific for renters. Actual cash value policies is the kind of policy that seeks to replace the value of the home or possessions minus a deduction for depreciation. Replacement cost policies pay the cost of rebuilding and repairing the home or replacing possessions without a deduction for depreciation. The third tier of protection in policy is the guaranteed or extended replacement cost policy which offers the highest level of protection.

A guaranteed replacement cost policy pays whatever it costs to rebuild the home of the insured as it was before the fire or other disaster, even if it exceeds the limit of the policy. This means that the insured is protected against sudden increases in construction costs due to a shortage of building materials after a widespread disaster or other unexpected situations. It generally does not cover the cost of upgrading the house to comply with current building codes. Some insurance companies offer an extended rather than a guaranteed replacement cost policy.An extended policy pays just a certain percentage over the limit to rebuild the home of the insured. Despite its cost, a guaranteed or extended cost policy offers the best financial protection against disasters for the home. These coverages as in all insurance coverages, are dependent upon location and insurance companies.

One of the first steps in protecting the valuables and possessions in a home, is taking an inventory. Having an up-to-date home inventory will help the insured get their insurance claim settled faster, verify losses on their income tax return and help them purchase the correct amount of insurance. Taking an inventory can be easy or tedious depending on the size of your household, amount of belongings, and level of organization. However, it is very worthwhile. One of the first steps is categorizing possessions, separating clothes and big items such as large furniture, valuables, jewelry, equipment, technology, and other possessions.

You can videotape your rooms, or take photographs to help in the inventory process. Making a list of all the possessions in separate categories with approximate cash value, is very useful. You can create these lists on your computer, PDA, or other device so that you have an easily accessible back-up list. You should store these lists and update them with valuables in a safe-deposit box, or at a friend or relative's residence, or other secure location apart from your personal residence, so that you can access this list in case of a disaster.