Almost every aspect of this situation could dearly cost you. Insurance laws may vary widely from state to state, different kinds of property require specialized coverage, and collections of art, antique cars, and other unique items may be difficult to protect fully. Meanwhile, serving on a nonprofit's board could subject you to additional liability that is personal.
Safeguarding yourself and your family may mean buying additional coverage, but more insurance isn’t necessarily the solution. Rather, it’s important to review all of your needs, consider specialized policies or policy options, and coordinate other aspects to your coverage of your finances. Here are 6 different shortcomings that could prove costly.
1. Leaving gaps in homeowners coverage. Any homeowner needs to review coverage regularly to keep up with rising replacement costs. But insuring different kinds of homes in different locales poses extra challenges. If you buy insurance from more than one provider, you may face contrasting rules, limitations, and policy renewal dates. For example, the liability limit on the policy for a home that is second fall below the minimum on an excess liability policy designed to complement the insurance on your primary home. You could wind up responsible for the difference.
2. Ignoring properties unique characteristics. One perk of affluence is the means to own homes that are exceptional one drawback is that they may be difficult to insure adequately. Standard homeowners coverage won’t pay for the materials and craftsmanship needed to rebuild that 19th century showplace you’ve painstakingly restored. Coastal homes may face hurricane damage, while a accepted place in the California mountains could become topic to earthquakes or wildfires. Meanwhile, city co-ops or condos may need policies tailored to their buildings or associations coverage.
3. Under insuring art and collectibles. Standard homeowners policies limit coverage for the losses of antiques, furs, and other valuables. And while you might schedule additional coverage, insuring the real value of a collection of contemporary art or vintage strength cars likely will require a specialized policy addressing several critical issues. How is the value of the collection determined? (You’ll need a appraisal that is professional the policy is designed, with frequent updates as items appreciate.) Will a destroyed or damaged item be paid for with cash, or will you be required to has it replaced or restored? Will additions to your collection automatically be covered?
4. Forgetting to insure household employees. When someone works you could be liable for medical expenses and lost wages if the worker is hurt on the job for you or your family, as a nanny, landscaper, personal assistant, or in another role. Several states require household employers to pay into a workers compensation fund, while in other states it’s optional, but providing such insurance may be mandatory for ensuring your financial well being. If an employee drives your car, make sure he also or she is included on your policy.
5. Neglecting your liability as a board member. Excess liability coverage could help protect you if you’re sued as a director of a nonprofit's board. Or for more protection that is comprehensive you may want to consider special directors and officers liability insurance.
6. Failing to get frequent policy reviews and updates. Your financial life isn’t static, and neither are your insurance needs. The value of a collection may increase; extensive home renovations could mean a sharp rise in the value of your property; and the re titling of assets as part of your estate plan—or because of divorce, a death in the family, or the birth of a child—could necessitate policy changes. Even lacking major events, you probably need a review that is comprehensive of your insurance coverage at least every two years.