Why you should have an ANNUAL insurance review?
I just quoted a gentleman who had a policy that he has carried for the last 5 plus years and I needed to increase the cost of construction, etc. up by over 5% which affects other coverages as well (increasing coverage) and he still saved over $300/year with his new quote.
Most homeowners purchase an insurance policy when they first move in, but they may not understand the importance of periodically reviewing to reassess their needs. This can lead to a gap in your coverage.
For instance, you may have insured your home for $300,000 when you first bought it. A decade later, your home may cost $400,000 to rebuild. That’s a $100,000 gap in coverage—which could leave you without the proper resources to rebuild in the event of a loss.
Maybe you recently renovated or updated your home – this is another reason you need an insurance review. This review can help ensure that your home and belongings are fully protected, and your coverage is keeping up with your current needs. Most every change you make in your home of any significance can affect your policy and may even qualify you for additional discounts on your insurance policy.
One way to evaluate your needs is to conduct a home inventory, a detailed catalogue of all your possessions. There are tools and even smartphone home inventory apps, like Digital Locker, that can streamline the process.
Tips for talking with your insurance agent
Despite what you might think, though, an insurance review doesn’t have to be an involved, time-consuming endeavor. A single conversation or a visit with your agent can help make sure that you’re knowledgeable about your coverage and comfortable that your limits are meeting your current needs. Most agents don’t take the time to do this. I recommend you ask for one.
Here are some ideas on what you might want to discuss as found in a recent article:
“Does my policy provide enough coverage to rebuild my home today?”
Many homeowners are surprised to learn their policy is outdated and does not provide sufficient coverage to rebuild their existing home. Changes in construction costs (they can vary from year to year), upgrades to a kitchen or bathroom, new kitchen appliances, or updates to a basement can all affect the cost to repair or rebuild your home. For example, new finishes in your kitchen can change your existing kitchen from “standard” to one that’s considered “semi-custom” or “custom.” Since insurance companies replace lost items with “like kind and quality,” it is important to estimate the full cost of replacing finishes, appliances, electrical systems and plumbing systems in determining your coverage.
“How does a newly finished basement affect my policy?”
A finished basement may not only increase the cost to rebuild your home, but it may also require additional coverage to protect items from water damage. For example, optional water backup coverage will help protect new furniture and carpet in your basement if a sump pump breaks or a drain backs up.
“Does my policy provide enough coverage for landscaping or outdoor appliances?”
Installing a new sprinkler system, a larger storage shed, a new pool or hot tub, or buying a substantial backyard grill or riding mower are outdoor changes that may require a homeowner’s policy upgrade. Updating landscaping and purchasing new lawn equipment or outbuildings can be significant investments that should prompt a coverage review.
“Do I need extended coverage for valuables?”
Your existing policy provides standard coverage for your home and belongings, but this coverage may not be sufficient for all your valuables and is frequently overlooked. For instance, you may need additional coverage for wedding rings, valuable golf clubs or other sports equipment, family heirlooms and antiques, musical instruments or artwork in your home. If you have a new home office that you run a business from, you might consider extended coverage to protect your business property.
“Do I qualify for discounts?”
An annual insurance review can also be an important opportunity to ensure you are receiving all possible discounts on your homeowners policy. For example, you may qualify for a discount if you have installed a security system, a smoke alarm or a hail-resistant roof. Additional discounts may apply if you insure both your car and home with the same company, if you don’t have any claims, or if no one in your household is a smoker.
Like home maintenance, an annual insurance review is something that can go a long way to protecting what is likely your biggest investment. Your local agent will know the details of coverage for your neighborhood, and can help make sure this is a New Year’s resolution you actually cross off your list.
When was the last time you reviewed or updated your homeowners insurance policy?
Make a point of getting this done this week!