Homeowner Insurance
Insurance is kind of a tough thing. Most of us have a love-hate relationship with insurance. Yes we may like our agent but we sure hate paying that premium. We all want our house repaired, or rebuilt, in the case of a fire. We expect somebody, mainly the insurance company, to shell out hundreds of thousands of dollars to rebuild our house, pay for our rent for us to live in another place while our house is being rebuilt, and replace all our personal belongings that were ruined by the fire, smoke, and water. When that annual premium shows up in the mail however, we grumble and complain and our hand becomes very reluctant to write that check.
We are in the last days. During the next 30 plus years we are going to be having increasing pestilence, floods, tornadoes, fires, earthquakes and other natural disasters. We are told that these will be of larger magnitude and more frequent duration than anything we have collectively experienced. You will be increasingly at risk, no matter where you live, that your house could be destroyed along with everything in it in an instant. The prudent thing to do would be to have sufficient insurance to cover this.
When I refer to homeowners insurance I am including renter's insurance, condo, and landlord coverage as well. Whether you rent or own you should have homeowners insurance coverage. Similar to your auto insurance, the liability coverage of your homeowners' policy pays for damages caused by you or your dependents to others that you are legally obligated to pay. The liability coverage should meet or exceed the value of the home.
Yes, the liability portion covers things like people slipping on the ice in your driveway and getting injured or falling down the stairs in your home. It covers you if your dog attacks someone, an injury occurs at your swimming pool, or an accident on your trampoline. It also covers you for things that have nothing to do with your home.
For example, let us suppose your 8 year old son takes a can of spray paint and attempts to help "fix" all your neighbor's cars by painting the scratches. There may be several thousand dollars worth of damage that is caused by someone you are legally responsible for. Your renters' or homeowners' policy would pay for all those cars to be repainted.
Because you can be sued for a great deal of money for accidents that arise you need to have proper coverage. The Seventh Seal will be a time of brother against brother and more lawsuits. Most people do not care about their neighbors. They care about getting justice, getting even, getting revenge, and getting money for perceived wrongs. Having a low liability limit of $100,000 on your homeowners' policy is not sufficient. Just like the auto insurance policy you need to have higher limits that will cover potential liability.
People ask me how much they should be insured for. My answer is, "How much to you think someone with an attorney could sue you for?" This is not a place to be cheap. If you are 25 years old, have no assets, and no children then the $100,000 may be sufficient. If you own a home, have a dog (it can bite someone), have a couple of children, and have a bunch of assets then $500,000 may not be enough.
You could be bankrupt overnight by having your house destroyed in an earthquake and not having earthquake insurance on your home. The same goes with a flood. Floods and earthquakes are not part of a standard homeowners policy. Water is the leading cause of damage to house and property nationwide. The way homeowner's insurance defines a "flood" is any outside water that comes into your home. Floods can happen any time and anywhere from extra rain, to mud slides, to a broken sprinkler pipe. Just because you haven't had a flood in your area over the last hundred years does not mean that one can't or won't happen. Flood insurance is therefore, very important.
Floods are any water that is outside the home which enters your home. "Floods" can be from rain water, a broken sprinkler pipe, a mud slide, or a swollen river. Floods can happen any time and to any house or apartment. Flood insurance also protects the home from natural disasters other than earthquakes.
Earthquakes are more common or expected in certain areas. But in the last days there will be earthquakes in "diverse" areas. This means there will be more earthquakes and in many areas. If you live in the "Ring of Fire" zone where many earthquakes take place, or the potential for a larger earthquake is greater, you would be rather foolish not to have earthquake coverage on your home or condo.
In my opinion everyone should have flood insurance for their house, condo, or rental properties. Most people would be wise to consider earthquake insurance as well. Get with your agent and make sure you are properly covered.
You can buy Brian's new e-book: Built Upon A Rock, Financial Self Reliance in Troubled Times for a 50% discount. Visit his web site for more information at www.brianhornecfp.com/
Brian Horne, CFP
Certified Financial Planner and Consultant
http://www.BrianHorneCFP.com
Brian Horne is a Certified Financial Planner. He has been in the financial planning industry since 1988. His college courses at the University of Utah and Westminster College in Salt Lake City were geared toward Business Communication, Financing and Accounting. Brian attended the College for Financial Planning and completed the two year coursework in the CFP Professional Education Program and then passed the Certified Financial Planner examinations in 1996. At the writing of this book Brian is attending the University of Phoenix in the masters accounting program working toward his CPA certification. As a mortgage loan officer Brian gained a deeper understanding about loans and real estate.
Brian had to study and pass examinations to become licensed in insurance and securities. He passed the Life, the Health, and the Property Casualty Insurance examinations. Brian studied and passed the Series 6 and the Series 63 securities examinations. Later he studied and passed the Series 7 (General Securities), Series 65 (Registered Investment Advisor), Series 4 (Options Principal), Series 53 (Municipal Bond Principal), Series 24 (General Securities Principal) and the Series 27 (Financial Principal). In addition, Brian expanded his financial practice as an accountant helping individuals and businesses with their tax returns.
Brian has worked for CUNA, the Credit Union National Association helping credit union members with financial planning. He was the CFO of a regional broker dealer for a number of years, a compliance officer for several years, owned and managed an insurance agency, and he has worked as an independent Certified Financial Planner since 1996. Brian's goal is to help the reader prepare for the troubled economic times that lie ahead through proper planning. Like the wise man who built his house upon a rock, you can have your financial house built to withstand the economic tempests that are coming.
