Guard Your Assets with a Homeowner's Policy

Physician's Money DigestOctober 2005
Volume 12
Issue 14

Hurricane Katrina caused hundreds of millionsof dollars in personal property damagethroughout Louisiana, Mississippi, andAlabama. In New Orleans, the water surge placedsome homes 12 feet under water. Unfortunately, itcan take a natural disaster to make you stop andthink about how you should prepare to protect yourselfin case you find your property caught in thecrosshairs of another natural disaster.

Proper Coverage

Your first level of defense is your standard homeowner'spolicy. Review your coverage with youragent to determine if it is adequate. You are likely tofind out that you are significantly underinsured. Infact, the Insurance Information Institute says thattwo thirds of all homes are underinsured by an averageof 27%. Your solution may be as simple as raisingyour basic homeowner's coverage, but if youhave antiques, expensive artwork, or jewelry, specializedcoverage may be needed.

Regardless of the amount of insurance you carry,you must have an accurate inventory of all of yourpersonal property. In a disaster such as fire, flood, ortheft, this inventory list can help you recover thousandsmore from your insurance company thanwould otherwise be possible. The easiest way to dothis is to videotape all of your personal property.Videotaping is easy and fast. Be sure to open drawersand closets and make as many comments as possibleabout any items that are unique, such as antiques(ie, costs, style, how old, etc).

Another inventory method is to use a digital camerato photograph your personal property, includinginvoices, appraisals, and other proof of valuation.Using a digital camera may be better than videotapingsince you can easily print out your inventory forreview with your property and casualty agent, financialadvisor, or family members. Whether you videotapeor photograph your belongings, be sure to makeat least one copy to store away from your home. It isimportant to update your inventory periodically, particularlyif you acquire additional personal property.

Specialized Policies

Sharing your inventory with your property andcasualty agent will help you determine if you needspecialized coverage. You should be able to raiseyour base coverage, but in some cases you mayneed to add rider coverage. Rider coverage comesin two forms. Either you can insure your antiques,art, and collectibles under separate blanket coverageor the items will need to be insured on a piece-by-piece basis, which is typically more expensive.Regardless, what's most important is keeping anaccurate account of your inventory. If you suffer amajor loss, having a detailed inventory is the onlyway you will be able to recall all of your personalproperty and justify the value of that property. Inthis case, an ounce of prevention may be worththousands of dollars. For more information aboutthe standards of proper documentation,

, is the founder of the Welch Group,

LLC, which specializes in providing fee-only wealth management

services to affluent retirees and health care professionals

throughout the United States. He is the coauthor of J.K. Lasser's

New Rules for Estate and Tax Planning (John Wiley & Sons, Inc;

2001). He welcomes questions or comments at 800-709-7100 or visit This article was reprinted with permission from the

Birmingham Post Herald.

Stewart H.Welch III, CFP®, AEP

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