If your physical assets (such as your home and car) are the majority of your net worth, it's important to make sure you're adequately protected with proper property insurance coverage. This can help provide peace of mind if difficult circumstances arise.
Many people overlook the importance of homeowners insurance. Not only does it protect one of your largest investments, your home, but it can also provide protection from personal liability if someone is injured on your property or if you injure someone else.
To assess whether you have adequate home coverage, consider asking a local contractor to provide an estimate of what it would cost to rebuild your home. Also, answer these questions:
- Do you have sufficient home insurance to replace your home and its contents if everything is lost in a fire, flood, or other covered disaster?
- Should you consider flood coverage? Get details about the National Flood Insurance Program.
- Have you added square footage to your home or made major changes to the existing space? If so, you may need higher replacement coverage.
- If you own a condo or apartment, what does your association's insurance policy cover? What are you responsible for besides replacing your personal possessions?
- Do you have fine jewelry or other highly prized collectibles? Consider having separate riders to cover these possessions.
What you can do now:
- Review your home insurance policy every few years. As your assets grow, you may need additional coverage for personal liability or recently acquired assets.
- Consider increasing your deductible to lower your monthly payments.
- Review your vehicle's Kelley Blue Book value to see if comprehensive ("full") coverage still makes sense.
Consider an umbrella policy, which picks up where your auto and homeowners insurance policies leave off. A personal liability umbrella policy can be a cost-effective way to increase your liability coverage by $1 million or more.
With this type of policy, your deductible will be high, since it's designed to be met by your other policies. An umbrella policy can protect your existing personal assets and future personal assets (like wages, inheritance, lottery winnings, etc.) against the cost of losing a lawsuit due to a car accident or accident on your property.
What you can do now:
- Get help deciding if you need extra liability insurance.
- Contact your insurance provider and review your coverage.
The information provided here is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, financial planner, or investment manager.
Brokerage and insurance products:
• Are not deposits
• Are not FDIC-insured
• Are not insured by any federal government agency
• Are not guaranteed by the bank or affiliates of the bank
• May lose value
Charles Schwab & Co., Inc., a licensed insurance agency, distributes certain insurance and annuity contracts that are issued by insurance companies that are not affiliated with Schwab. Not all products are available in all states.