In light of the La Tuna fire, now is the time to review your homeowner’s insurance policy. Los Angeles homeowner’s should review their policy annually. Trying to save a few hundred dollars on premiums is a very costly mistake. Failing to have adequate insurance to cover the cost of rebuilding your home (or other real estate) in the event of fire or other loss is one of the biggest blunders a homeowner can make.
How much should your Los Angeles home be insured for? Market value, which includes the value of your land, is not the same as the cost to rebuild. Don’t necessarily rely on what the insurance company thinks it will cost to rebuild your home. And don’t rely on the amount of coverage the bank required in order to grant you a loan.
How much will it cost to rebuild your home? Check with a local Realtor or contractor. Replacement cost to rebuild your home can easily be $400 or more per square foot. When estimating the cost to rebuild, don’t forget special finishes, fireplaces, custom closets, wet bars, balconies, and high end appliances. Factor in your personal property, wardrobe, furnishings, etc.
Other factors to consider when evaluating your existing insurance policy:
o Verify that your home stats are correct (beds, baths, square footage)
o Any recent renovations or additions which increased the value of your home
o New pool or dog (increase your liability insurance)
o Major purchases such as furniture
Add your insurance review to your calendar, your home may be your largest asset and you need to protect it. Every other year, meet with your insurance agent or at least have a detailed phone consultation to be certain you have the proper coverage in the event disaster strikes.
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