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| Cunha's fire points out importance of insurance Published/Last Modified on Sunday, June 15, 2003 10:00 PM PDT The fire at Cunha's Country Grocery store was tragic. It shows how one accident can destroy a lifetime of memories. That kind of event can also wipe out your savings if you're not properly protected. This fire should be a wake-up call for everyone to dust off their insurance policies and look at their amount and type of coverage. You probably haven't done this since you bought your home years ago - which means you may find yourself underinsured. Joe Angelini of Farmers Insurance says that construction costs have increased significantly because of inflation - and there are many new-building code upgrade requirements that weren't in place years ago. For example, all new homes now need indoor sprinklers. That alone can cost $7,000. Besides this are a bunch of other costly items. The older your home, the more expensive it will be to upgrade to today's standards. The worst-case scenario would mean rebuilding your home or business from the ground up, and that's what should be covered in your insurance, Angelini said. Even if the foundation of your 25-year-old home survived a fire, it may not pass today's more rigorous standards. So you might have to rip it out and start from scratch. A good rule of thumb for replacement costs range from $150 to $300 per square foot. So if your 2,000-square-foot home has to be rebuilt like that, you could be looking at a $600,000 price tag. If you're only insured for $250,000, you have an expensive problem. And obviously, the more expensive your community, the higher the replacement cost will be. Check your policy's clause regarding building-code upgrades. Most policies pay for some of these. It probably won't pay for all the new additions, but every bit helps. Angelini also suggested that you insure all your personal belongings for 75 percent of the value of the house. There may be limits on the amount of coverage for jewelry and other expensive items in your home, unless you spell out exactly what you have. To prove what you own, photograph or videotape the contents of every room. And don't store these tapes in your desk. If there's a fire, all your proof will go up in flames along with the rest of your home. Put these in a safe-deposit box or a fireproof safe. Having proof of your contents will avoid a lot of arguing later with your insurance adjuster. It's also likely that you may be so distraught about your loss that you can't remember everything until after you settled your claim. Then it's too late. Unfortunately, there's no amount of money that can replace other photographs - the ones of your kids or parents - and other mementos. Even without hard proof, most adjusters will work with you regarding your contents. One thing you should know: There will almost always be some part left of a damaged item. Don't try to pass off a melted 19-inch television as the remains of a 57-inch-wide screen, because that won't work. You should have coverage to cover living expenses like food and lodging until you are re-situated. Again, your lifestyle and policy will dictate whether your insurance company will put you up at the Ritz or the Ramada. There's a wide range in how long it can take to settle a claim. Most of the time, this will happen in around a month. More com-plicated claims could take up to a year. When hiring contractors, make sure they have adequate insurance. Their standard coverage is $1 million; that's OK for most homes. There are so many choices with regards where to buy insurance. The Internet is certainly making inroads into this market. While these premiums may be cheaper, a local agent knows your property, the community and the building codes. The personal service they provide could prove invaluable if disaster strikes. And worth the price, too. Steven Hyman is the broker/ owner of Century 21 Sunset Properties. He holds a master's degree in international finance and a bachelor's degree in economics. He can be reached at 726-6346 or century2lsunset .com. |