One of the last minute decisions my buyers usually make concerns the level of insurance they obtain for their new purchase.  This decision can be complex because of market conditions and other factors related to your business and personal situation.

For example, if you buy a $300,000 home it may not make a lot of sense to insure the property for $300,000 because part of the purchase price includes the value of the land on which the home sits.  So assuming the land is assessed at $100,000, you might feel that you would need only $200,000 worth of coverage on the home, right?  Not necessarily, because you might have bought a foreclosure at a discounted value and the cost to rebuild the property may be $150 per square foot and your home is 1,800 square feet.  So you might actually need $270,000 worth of insurance coverage ($150 x 1,800).

These are just some of the issues that are involved in insuring your property.  It is best to consult an expert in the insurance business to be sure that you and your property are protected. 

Also, if you plan to rent out your property, be sure and get rental income coverage.  If your tenant cannot live in the property while it is rebuilt after a fire, you do not want to suffer from a loss of rental income during construction.

I suggest that you also analyze your liability coverage on your properties and discuss with your insurance agent the potential value to you and your business of an umbrella policy for additional liability coverage. 

Insurance is one of those purchases we make with little forethought, until an event occurs and we scramble to determine if we are covered for the calamity.  I recommend to my clients that they have an annual insurance ‘check up’ to figure out if all their various policies (life, health, property, business) fit together properly.

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