Now is a good time to check insurance policy - East Valley Tribune: Business

Now is a good time to check insurance policy

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Posted: Friday, June 6, 2003 11:29 pm | Updated: 1:24 pm, Thu Oct 6, 2011.

The East Valley's housing market is booming with new people entering the market and home values rising for many owners. These changes present opportunities, but they also mean new challenges when it comes to buying and maintaining homeowners' insurance.

About 80 percent of homeowners surveyed by Harris Interactive for the Fireman's Fund Insurance Co. reported that their homes have increased in value in the last five years, but only 63 percent of those people say they have increased their homeowners insurance coverage.

Policyholders should conduct an annual review of their policy and sit down with their agents to discuss possible changes, said Jim J. McCauley, western regional sales director for the Fireman's Fund.

"Things change in your life," he said. "Things change in the industry."

Homeowners insurance can be expensive or inadequately meet the policyholders' needs because they make assumptions about what is covered, experts say. For example, the Department of Insurance receives consumer complaints about the policy caps on replacement-cost coverage, which pays to replace the dwelling and personal property, spokeswoman Erin Klug said.

Homeowners often assume they have replacement-cost and temporary-living coverage, but some policies may charge an additional premium or limit the amount of coverage.

"Most people think their housing will be rebuilt no matter what it costs to rebuild," McCauley said.

Several factors affect a home price, including materials and labor costs, and location fees, which can increase the price to rebuild a home. Consumers also sometimes underestimate their liability coverage. Insurers typically offer some liability coverage,but consumers can purchase umbrella coverage to offset legal costs and jury awards in lawsuits. One in four people have this coverage, according to the Harris Interactive survey, but more than 90 percent of them said lawsuits are more common now than 10 years ago. Nearly 70 percent of those surveyed said they think they'll be sued.

The most common reasons people are sued are auto accidents, personal injuries at a residence and dog bites, McCauley said. Another area consumers sometimes underestimate is insurance on collections, antiques and jewelry. The Harris Interactive survey found that less than 20 percent of homeowners have special insurance for their valuables even though more than 40 percent estimate their collections to be worth between $5,000 and $50,000. If the valuables are insured as a rider policy, the insurance agent and consumer can agree on the value up-front, which saves time when there is loss or damage. Some policies include coverage for broken pieces and lost items such as a diamond falling out of a wedding ring. Other common exclusions or limitations in homeowners policies include computers, firearms, loss to animals, water damage, war damage and property used for business purposes.

"Reading your insurance policy can be challenging," Klug said. "If you have questions, you should talk to your agent."

All policyholders should write down what they own each year and take pictures or videotape their home if possible to make the claims process easier, McCauley said.

The inventory should be stored in a bank vault, safety deposit box or another safe place away from the home, he said.

A list of homeowners insurance check-up questions is featured on the Arizona Department of Insurance Web site at

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