Homeowner’s Insurance Considerations

By Ginny Graef, CPA, Partner

Homeowner’s Insurance Considerations

Time to Review Your Homeowner’s Insurance Policy Limits

The current state of the US economy is creating very trying times for homeowners and home buyers. Home prices have increased substantially all around the country since the COVID slowdown. Supply chain disruptions, scarcities in the skilled labor market, and other inflationary pressures have drastically driven up the price of new homes, home improvement projects and basic repairs/maintenance costs.

Inflation and the Real Estate Market: Impact on Homeowner’s Insurance Policies

Considering these inflationary trends, now would be a good time to meet with your insurance professional and review the limits of coverage contained in your homeowner’s insurance policies.

The coverage limits in your current policy may not be enough to provide for the full replacement cost of your residence should a loss occur due to the impact of inflation. In addition, the policy limits for the replacement of the contents of your home may be low compared to current replacement costs.

When discussing your homeowner’s policy with your insurance professional, you should also take this opportunity to discuss your umbrella liability coverages to ensure the policy is appropriate based on your overall total net worth.  Generally, one should have umbrella insurance coverage of about one to one and a half times your net worth.

Homeowner’s Insurance Considerations with a Revocable Trust

Many individuals transfer ownership of their personal homes to a revocable trust as part of their estate planning process. If and when this is done, it is important that you alert your insurance professional to the change to make sure the policy correctly lists the trust as an insured party. Failure to do so could have a very negative impact on your insurance coverage should a loss occur.

The same goes for vacation homes or rental homes owned by LLCs. If the home is owned by an LLC, you should discuss with your insurance provider to make sure the member/owner and the LLC are listed as insured parties.

In addition, if you have valuable collectibles, (i.e. sports memorabilia, art, wine, jewelry), you should review your policy to ensure these items are not only covered, but covered at full replacement cost. Many standard homeowner insurance policies have limited coverage for collectibles, so you will want to make sure your policy has adequate coverage.

Questions on Your Insurance Coverage or Estate Plan?

Keiter professionals recently sat down with Julie Rison, Senior Vice President Private Client Services Division, at Marsh McLennan Agency to discuss many of the topics touched on in this article. If you are uncertain whether you are adequately insured or have questions not addressed in this article, reach out to your Keiter Opportunity Advisor or Julie Rison at 804.915.5678 | julie.rison@MarshMMA.com.

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About the Author

Ginny Graef

Ginny Graef, CPA, Partner

Ginny enjoys working closely with her clients and their team of legal and financial advisors to provide tax planning solutions that meet her clients’ specific needs and goals. Ginny’s areas of expertise include income, gift, and trust and estate compliance and planning services. In addition, she focuses on compliance and consulting related to investment partnerships.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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