December 21, 2023
We ask almost all of our clients “do you have sufficient insurance coverage?” The most common response we get is “yes, I am fully insured.” Unfortunately, that response does not tell us whether a client has sufficient insurance to protect themselves if something goes wrong. The list below is a guide to help you identify the most relevant coverages to ensure you are sufficiently protected in the event of a loss.
Homeowners Insurance
The issue: The most important coverage to review under your homeowner’s policy is your “replacement cost” insurance. The limit of this coverage is the maximum available to you to rebuild your house in the event of a total home loss. Since the pandemic the cost of construction materials has skyrocketed. If your replacement cost coverage is the same now as it was in 2019, you could not rebuild the same home now that you could four years ago.
What to do: Review your declaration page and determine the limit of your replacement cost coverage. Reach out to any reputable home builder in the area and obtain an estimated cost to rebuild per square foot. Do the math and see if your current limit is even close to the estimated cost to rebuild. If not, talk to the insurance agent and increase that coverage.
Under-Insured Motorist Coverage
The issue: The minimum required auto liability insurance limits in Nebraska is just $25,000. If someone else causes a collision and has these minimum limits, liability insurance may not be enough to even pay for your medical bills. In that situation, you have coverage under your own auto policy called “underinsured motorist insurance” (UIM for short). Making sure you have sufficient UIM limits will protect you and help pay your medical bills, lost income, and for the injuries and suffering you endure because of someone else’s negligence on the roadway.
What to do: Review your auto insurance declaration page for UIM coverage. Ask your insurance agent to increase that coverage to the maximum available limit. This coverage is generally inexpensive and will help protect your financial future if you ever get hit by another driver.
Umbrella Coverage
The issue: Homeowners and Automobile insurance policies typically have lower limits for both your liability and UIM coverages. If something happens at your home or on the roadway that is your fault, any resulting damage above these amounts are likely to fall on you personally. Umbrella policies sit on top of your primary policies, providing additional liability coverage (and often additional UIM coverage). We handle many cases every year that have damages two, three, and four times that amount provided under homeowner’s and auto policies alone. Umbrella coverage also is relatively inexpensive.
What to do: Make sure you have an umbrella policy in place with at least $1 million limits for both liability and UIM claims. The more assets you have, the higher your umbrella coverage should be. Do not overlook the additional UIM coverage under an umbrella policy. Many insurance companies refuse to offer additional UIM coverage in umbrella policies. If that is the case with your company, you should strongly consider moving to a company that offers additional UIM coverage under umbrella policies.
This article is provided for general information purposes only and should not be construed as legal advice. Those requiring legal advice are encouraged to consult with their attorney.
