If the New Year inspires you to get your financial house in order don?t forget to have a look at your homeowner's policy. Do you even know where your policy is?

Well, dig it up and find out if it includes Guaranteed Replacement Cost protection ? an optional coverage you may have declined when you bought the policy. These days, however, with property values and construction costs constantly on the rise, it may be an option you want now. You could be underinsured if you live in a buoyant housing market or you've made changes to your home that have added to its replacement value.

You will need enough insurance to cover 100 percent of the cost of rebuilding your house, but don't confuse what you paid for your house with rebuilding costs. The land isn't at risk from theft, fire or floods, so don't include its value when you're deciding how much insurance you need. Premiums are high enough without insuring what doesn't need protecting. A good way to estimate replacement cost is by multiplying the square metres of your house by the local square meter construction cost. So if your house is 200 square meters and construction costs are R3000 per square meter it will cost you R600 000 to rebuild.

Your policy is probably pretty standard, meaning it covers your house and possessions from damage caused by fire, smoke, lightning, hail, explosions, vehicles, theft and building collapse. Your policy won't cover damage caused by neglect so don?t expect the insurance company to pay for soggy carpets if you don?t fix a leaking roof. Make sure that you fully understand what the policy covers, items like jewellery and computer equipment are usually covered separately so it is important to inform the insurers that these items require coverage in the policy.

The new year is a good time to review your policy because you may have procured some valuable items as Christmas presents. It is an expence that we all resnt paying because you get nothing tangible in return. It does, however, buy you peace of mind. Few individuals could bear the cost of rebuilding a home or replacing a car, so while it hurts to pay those installments, enduring the consequeces of no cover is far more painful in the event of calamity.