A Tragic Lesson on Protecting Your Home Equity

Home equity seems to be evaporating every time we turn around these days. It is critical that we protect whatever equity is left.........

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The catastrophic events on the east coast a couple weeks ago should remind us that we need to be careful with our larger assets. Many homeowners on the east coast lost their homes due to the earthquake and hurricane disasters. Sadly, some are not getting their homes back. They are learning a very hard lesson that adequate and proper insurance coverage is vital to protect your house and all possessions in your home.

“Don’t make a terrible mistake in assuming your current insurance will cover all disasters, theft and liability.”

Don’t make a terrible mistake in assuming your current insurance will cover all disasters, theft and liability; as many insurance policies exclude certain coverages.

In addition, you want to ensure that your policy covers “replacement costs”. The replacement cost of your home, and the appraised/market value are two very different things. The market value (based on comparable home sales) has decreased all across the country over the past few years. But the replacement cost to rebuild a home has actually gone up with inflation and other building costs. So without “replacement cost” written into your policy, you may not receive enough money to rebuild your home in the event of loss.

I highly suggest taking a few minutes to contact your insurance agent to ensure you are properly covered. It could save you several thousand dollars, if not much more. This not only applies to insurance for your home; but also other insurances such as auto, health, life, disability and long‐term care.

Contact me any time with your tax and/or mortgage questions...I’m here to help!!