Outdated Home Insurance Can Cost You

It's an unfortunate fact of life: When the economy tanks, property crimes such as burglary, theft and robbery rise.

And now that our economy is really tanking, some are expecting a big increase in these crimes during 2009. "What you'll see is more people taking advantage of an opportunity, a window they see ajar or a house where they see the owners have just left, rather than a big planned burglary," says Thomas Smith, a security consultant in Los Angeles.

Before making sure your home is as secure as it could be, it's not a bad idea to look at your insurance coverage since your property and your situation may have changed since you first bought the policy. "The biggest change for many people is jewelry," says Tim O'Brien, director of private client services at insurance broker Cook, Hall & Hyde in East Hampton, New York. "The jewelry box in the master bedroom is often a burglar's first destination. Even for someone who may not have much jewelry, the gold you bought 10 years ago is worth five times more today. Is that reflected in your policy?"

Most homeowners' policies cover jewelry, but there's usually a general limit of up to $1,000. Expanding that requires a rider on the policy to cover more expensive items. "This is where you'd need an appraisal to show how much it's worth and how much it would cost to replace," says O'Brien.

A good question to ask your agent is how claims are handled. In some cases, after you report a loss and show an appraisal, an insurer could come back and challenge the appraisal as inflated. "Insurance companies have become very careful," says Smith. "If you've got an old Rolex your grandfather gave you and your appraisal shows it's worth $7,000, they're going to see if they can't find that same watch in the same condition for less."