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Six Overlooked Insurance Policies

Melissa Neiman, Bankrate.com

When insuring your assets, one misstep can leave you with an expensive loss.

Insurance Policies
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"Never risk more than you're prepared to lose," says Jack Hungelmann, a veteran insurance and risk management specialist and author of "Insurance for Dummies."

Experts typically urge people to purchase insurance coverage in five risk areas: major medical bills, destruction of home, major lawsuits, long-term disability and premature death, Hungelmann says.

"A good insurance program is a balanced one that covers all five major risk areas," he says."

But what about less obvious forms of insurance? In some cases, a little extra coverage may go a long way toward securing your financial future.

Following are six policies you might need, even if you don't realize it.
Backup of sewer and drain coverage
This type of policy covers damage resulting from backup of the sewer system, as well as sump pump overflow. Such damage may result from flooding due to heavy rainfall during a power outage.

Coverage for a sewer or drain backup is recommended if your home is connected to a public sewage system, especially if you have a finished basement and a sump. Your need is even greater if you live in an area with considerable rainfall.

"Claims from standing sewage (or) water in a home can easily be in the tens of thousands of dollars," says Bill Wilson, associate vice president of education and research for the Independent Insurance Agents & Brokers of America and director of Big "I" Virtual University.

Coverage for a sewer or drain backup is typically inexpensive, costing $50 per year on average, Wilson says. That makes the coverage a relative bargain for an event that occurs more often than some might think.

"While losses aren't common, they aren't rare," says Wilson.

Hungelmann says it's important to choose the right amount of coverage for any disaster that might strike.

"If your basement fills with sewage or flood water, you're going to have a real mess on your hands," Hungelmann says. "Be sure that you have enough coverage to rebuild if such damage occurs."

Identity theft coverage
Identity theft coverage pays for out-of-pocket costs to restore your identity if you fall prey to this growing crime. Such costs may include legal fees, long-distance phone charges and other expenses you incur while trying to clear your record.

According to Wilson, some insurers are now providing limited identity theft coverage for free. This protection often is offered as part of a homeowner policy.

"Otherwise, it typically costs between $30 and $80, but the coverage amount varies widely from a few thousand (dollars) to five figures," he says.

Although Hungelmann says identity theft insurance is not crucial, he believes many people can benefit from the coverage.

He suggests purchasing coverage that includes the services of a coach who actually walks you through the process of restoring your identity.

"(An identity theft recovery) coach will tell you what your rights are, send you sample letters, let you know who to call and stay with you until the problem is resolved," Hungelmann says.

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"Having a coach is 80 percent of the value of this type of insurance."

Business in the home coverage

This type of coverage protects home office furniture, equipment and supplies used for business purposes. It's a good idea for anyone who keeps at least a few thousand dollars worth of these items in their home, Wilson says.

"Most homeowner policies limit coverage for damage to property used in a business to $1,500 or less on the premises and $500 or less off the premises," he says.

Many standard homeowners policies cover property as long as it is not used "primarily" for business purposes, he says.

"So, if you used your home PC occasionally for business, the limitation probably would not apply," Wilson says.

However, other homeowners policies will not cover any furniture or equipment that is used for business purposes at any time.

"Under that restriction, the limitation would apply to a home PC if it's ever used for business," Wilson says.

Business in the home insurance also covers liabilities that most standard homeowner's policies do not.

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