I’m embarking on a new journey this year. Over the last thirteen years I’ve helped homeowners, new home buyers, and real estate investors in California protect their lifestyles and stay out of harms way so they can keep their assets in their pockets.
Very early on I saw the importance of being a problem solver and educating my clients so they could make the right decisions about their insurance protection. It sounds sexy, but it’s not. In fact, most people when you say the word “insurance” they immediately check out and look for the nearest exit.
WHY? I get it. Insurance is boring. Most consumers have no interest in it, until something happens in their life that changes their perception of what insurance actually does and the value it brings.
Insurance is a great tool and when used properly it can create a strong foundation to protect your income, your family, and your health.
I have said before,
the foundation to building wealth starts with financial protection. Understanding how to protect what you already have is one of the primary concepts to achieve financial freedom.
Many of these ideas have to do with the proper mindset. Mindset is everything. Without the right mindset you end up “running for the hills” when someone talks about insurance.
This is where the industry and many of my peers underdeliver. They constantly focus on price and the cost of insurance and overlook the importance of the proper protection. They do consumers a huge disservice by focusing so much of their time and resources on lowering the cost to squeeze every dollar out of the policy that it loses its value. And when the time comes when you need it the most the coverage doesn’t protect your lifestyle.
That is my goal as a personal risk manager. I want to change your mindset and the way you look at insurance. I want to invite you into a story where all your assets are protected, you have peace of mind, and you have the proper plan to achieve financial freedom.
Starting with a plan to be financially protected is the part of the story where we begin our journey. Insurance agents play an important role in guiding their clients in the right direction so they can make educated decisions about the proper protection they desire. That is very valuable to consumers seeking to protect their assets and their real estate investments.
In California, having an insurance agent that works closely with your real estate agent, CPA, and CFP creates a healthy ecosystem of “subject matter experts” that provide holistic solutions to their client’s problems.
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And as your needs change they play an intricate role guiding you through different stages of life making sure you stay on the right path to building wealth through real estate.
No matter where you are on your journey through life it’s always best practice to educate yourself on the best way to protect yourself, your family, your income, and your health and well being. You don’t need a million dollars in the bank to start learning how to be financially protected and build wealth.
So let’s start making insurance exciting! Well, maybe not. How about we start with changing the mindset when it comes to insurance. This year I want to lay a foundation starting with some basic strategies that you can implement right now to help you create a plan for you and your family.
Whether you’re buying your first home in California or adding another investment property to your portfolio, this information will help you understand exactly how to protect your lifestyle.
Personal Insurance Protecting Your Home
I’m going to start with some basic tips on how to help you get the best value out of your homeowners insurance in California. These are benefits you can include if you own a home or you’re a first time home buyer!
- Make sure your home in California is insured to value and your policy has extended dwelling replacement coverage. Replacement cost is a MUST. Your home has to be insured up to the replacement cost of the structure. How much would it cost to rebuild? That’s replacement cost or insurance to value. I recommend a minimum of 150% extended dwelling replacement. That will come into play if the cost of materials increase or labor costs increase after a covered peril.
- Loss of Use. If you have a claim and you cannot live in your home while the repairs are being completed, you need additional living expense coverage. If you have a total loss from a fire you could be displaced from your home up to 1-2 years. This is why having adequate loss of use limits for your lifestyle are critical. Most people overlook this coverage and most agents will reduce this type of coverage to lower the rate. Purchase the maximum amount of loss of use that is available from your insurance company. In California, you can activate this coverage if your home is in a mandatory evacuation zone. Lodging, food, gas, and transportation costs can be covered under additional living expenses.
- Liability for your residence premises. If you’re sued due to negligence this will keep your assets in your pockets. In some cases, this coverage can be activated for personal injury as well. Remember, you don’t have to be a millionaire to be sued like one. If you live in California, your property is one of your most valuable assets. You should purchase at least $500,000 in liability on your homeowners policy. Some insurance companies are offering up to $1 Million limits.
- PRO TIP: I would also purchase a personal umbrella policy. This is a separate policy you can purchase that provides an additional layer of protection for your assets. It will cover your home, autos, toys, and rental properties and provide you with legal defense in case of a large lawsuit.
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Some of my peers say insurance is like defense and if you played sports defense was never very glamourous. But, a good defensive strategy always wins championships. That’s how I want you to start thinking about your insurance protection. As a defensive strategy to help you win so you can live your best life.