Tuesday, February 21, 2012

Is your homestead properly insured?

Recently we had a barn fire (if you missed that post you can go here). After having to deal with the insurance company, we are learning a few things that we hadn't even considered before. Such as, all of our outbuildings are only covered for 10% of what our home is insured for, no matter how many there or how they are destroyed. For example, say we had four barns taken out by a tornado, they would only be covered for that 10%, no matter what the actual cost to replace all four would be. Now, we don't have four barns, but we do have two sheds that also count as out buildings, so that was good to learn. We need to speak with our agent to take care of that in the future.

We also learned that we have to list every single item we lost in the fire, including the make, model, year, where we got it and how much replacement cost would be. This task can be very hard to do if you don't have good records, which we didn't. We are known for buying things from individuals or sales, not new from the store and we don't keep records for that kind of stuff. So, we are having to estimate the best we can and try to remember what everything was.  For instance, we had an old microwave in there that was totally burned, I have no idea what brand it was and all of the writing that was on it, is obviously all gone now. My mom had to make a list for everything in her home after the tornado in May, I cannot imagine how hard that was. I plan to start keeping better records soon.

We also discovered that four wheelers and dirt bikes are not covered under our home owners policy unless they are used for maintaining our property, which our four wheelers were. If they would have been used for hunting or if we had taken them off the property, they would not have been covered. However, we didn't, we used them for hauling hay, rocks and such like that; so they were covered. The dirt bikes were not.

We plan to sit down with our insurance agent and discuss what kind of coverage we actually need to have for items such as that. We do have replacement coverage on certain items, but we also have to speak with our agent because there is a cap amount for that and we want to know if we reach that cap, does that mean if something were to happen to our home, we wouldn't have any replacement money left. (Does that make sense?) We'll be finding that out before we turn in our forms. Oh, and make sure you have replacement coverage, as some insurance only pays you what the items were worth, not what it costs to replace them.

This post is meant to encourage you to check with your insurance agent to make sure you actually have the coverage you need. Our adjusters also told us that if you have farming equipment and are using it to make any kind of profit, it is not covered on your home owners insurance. You really don't want to wait until something happens to find out that you didn't have the right kind of coverage.

Here are some tips we learned the hard way:
1. Speak with your agent to make sure you have enough coverage for all outbuildings.
2. Keep records of all purchases and details of each item. I plan to video tape the contents of our home soon and then store it at my dad's in case anything ever happens to our home.
3. Check your coverage to make sure you would get replacement cost.
4. Insure any atv's, camping trailers and such separately if you want to make sure they are covered.
5. If nothing else, keep a list of what is in each outbuilding. You would be surprised at what you forget you had.


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