How to save a ton of money and avoid financial disaster

I’m gonna save you a ton of bucks right now, and maybe if you are really unlucky, a few $100,000.

In one of those odd confluences of fate, I heard two really awful insurance related stories yesterday, neither of which had to be so painful.

Learn from them.

Ugly Story One:
A relative has her condo up for sale. Long story short, jewelry was stolen during one of the showings. A few specific expensive pieces were pilfered.

Here’s the insurance info you may not know:  Unless you specifically have a rider for individual items on your Home Owner’s policy, you are likely looking at a $3,000 limit (it varies by policy). 

Not per piece — without a rider, that may be the total limit on personal items. EVEN IF $50K IN GOODS IS STOLEN (Ouch)

Important Lesson:  Buy a rider for specific items worth more than $3k in value: Rings, Bracelets, Earrings, Watches, even Plasma Screens. I assume the same applies to any Art items — paintings, lithos, etc. Of course, save reciepts and place copies in a duplicate locations.

Also, one can never go wrong with an Umbrella Liability Insurance policy; $3 Million is actually prettty cheap coverage.

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Ugly Story Two:  You have fire insurance, which you assume covers rebuilding your home in the event of a total loss. Not true. As one of my neighbors discovered, their insurance is for a specific dollar amount — NOT REPLACEMENT VALUE.

So if you bought a house 10 years ago for $300k, your insurance today (likely $150k — it covers the home, not the land) is likely totally inadequate to replace the home in the event of a total loss.

Important Lesson:    Periodically review the replacement cost of your home(s). Get builder/contractors estimates of a total rebuild costs; Upgrade your coverage to full replacement cost.

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Pay attention:  I declare today CALL YOUR INSURANCE AGENT AND COVER YOUR ASS day.

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Feel free to share insurance horror stories — as well as good coverage tales — in the comments below.

 

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