Why It’s Important to Review Your Homeowners Insurance Policy Every Year
Review Homeowners Insurance Policy—Check & Update Your Policy
Homeowners insurance isn’t a luxury; it’s a necessity. It provides crucial protection for any homeowner and enables you to preserve the integrity of your investment. A home insurance policy will provide compensation for you to repair or rebuild your home in the event of damage due to a covered natural disaster. For this reason, reviewing your homeowners insurance policy isn’t something you do and forget about once you sign on the dotted line. Most insurance providers will send you a renewal statement once a year or before your policy is set to expire. Now, this is a great time to review your existing policy to ensure you’re still getting the best deal and coverage options possible.
How Often Can You Review Your Homeowners Insurance Policy?
Here’s a fact most homeowners are unaware of: You can cancel your policy or change insurance products whenever you want – even in the middle of your term. Yes, you’ll incur a small cancellation fee, but the savings benefits can more than offset these costs with the right insurance policy.
A lot of homeowners wait for their insurance rates to rise before calling their homeowners insurance company. That said, it’s best to review homeowners’ insurance once a year.
Most home insurance companies reevaluate their rate and change the cost of policies, and your premiums will change as a result. So, if your mortgage has gone up, it’s likely because your insurance premiums have changed.
Knowing whether your rates rose because of changes in your risk profile or marketplace conditions will help you negotiate. It’s also important to comparison-shop, at least once a year, to ensure you’re getting the best rates in the market.
What Does It Mean To Review A Homeowners Insurance Policy?
Over time, you’ll make renovations or replace existing appliances. Unfortunately, many homeowners fail to review their policies to ensure any changes they make are covered. You don’t want a gap in your coverage, as this could impact your finances in case of an unforeseen event.
If you haven’t taken a close look at your policy in a while, it’s time to reassess your coverage options. So, what do you need to do?
1. Take a Home Inventory and Ensure It’s Insured to Value
When you pay for home insurance, you’re insuring two distinct things:
- The structure of your home
- Your personal belongings
Making sure the structure of the house is covered should be your number 1 priority. Possessions and liability should all be secondary. Don’t base your coverage on your home’s appraised value – that is, according to the National Association of Insurance Commissioners. Instead, use recent, average per-square-foot replacement costs in your area.
Insuring to value means insuring your home for the total amount it would cost to rebuild your home and replace any damaged items. If your insurance cover isn’t enough, you’ll be responsible for any expenses that exceed the coverage limits.
2. What’s Not Covered?
Homeowners insurance generally covers destruction and damage to an individual’s house and assets. Insurance coverage also extends to any accidents that might happen in the home or on the property.
The biggest mistake you can make is assuming that all perils are covered. Most people aren’t aware of what their policies cover or don’t cover until the time comes to file a claim. For instance, your standard insurance policy won’t cover damage from floods, and you may be required to buy extra coverage depending on where you live.
Plus, take note of common exclusions such as repairs due to lack of routine maintenance and add them to your list of home maintenance projects.
3. Enlist the Help of Your Insurance Agent
Conduct a home insurance review with your agent or an independent agent. This way, you get to ensure that your current policy covers everything you need it to. During this meeting discuss the following:
- Considering carrying a higher deductible. You want to go for the highest deductible you can afford to lower your premiums. You should also be mindful that deductibles are based on the insured value of your home, not what needs to be fixed.
- Ask about discounts. You might qualify for a discount if you’ve recently installed a home security system.
- Ask to review your car insurance policy. Combining your home insurance with auto insurance can make you eligible for a discount. Ask about any safe driving discounts you might be eligible for too.
- Review home renovations. If you’ve upgraded any features or appliances or added to your home, it’s paramount that your insurance policy reflects these changes.
Reviewing your home insurance policy will help you avoid being over- or under-insured. Your home insurance company should be made aware of any significant changes in your life. Even something as minor as purchasing jewelry or buying furniture to work from home.
Reasons To Review Your Homeowners Insurance Policy
As you can see, an insurance review takes a thorough look at your insurance coverage. It helps provide you the peace of mind that you and your personal property are protected in case something unexpected happens.
You should also consider an insurance review when your circumstances have changed or when you experience a life-changing event. For insurance purposes, a qualifying event means:
- Changes in your living situation – If you decide to move, rent out, remodel or sell your property, it’s essential to talk to your insurance company to find out if your current policy still applies. This also applies to vacation home swaps and renting out rooms on Airbnb.
- Increase in property value – Property value tends to increase over time, and your insurance policy has to reflect this rise. Otherwise, you won’t be covered and have to cater for the difference when rebuilding your house.
- Starting a home business – You might need supplemental coverage to protect your business operations. It’s also possible to take out a separate commercial insurance policy that covers any business equipment or supplies you have in your home.
- A change in family status – Major life changes such as marriage, divorce, having a baby, adopting a child, or losing a family member can all affect your homeowners insurance. You may need extra or less coverage if there’s a significant change in the value of belongings in your home.
- Purchases that could increase your liability – Swimming pools, hot tubs, trampolines, and the like bring a new level of risk to your home, which must be accounted for in your insurance coverage.
Significant events are a part of life. Reviewing your homeowners insurance policy ensures that your coverage is always aligned with your life events.
Assuming you’ve filed an insurance claim recently, how was the experience? In the insurance industry, good customer service is as important as getting adequate coverage and lower premiums. Think about how the claim was handled and the support you got through the process.
An annual insurance review can go a long way in protecting what is likely your most significant investment. If you do decide to switch policies or insurance companies, you’ll want to do so as as possible. Request insurance quotes before your policy expires to avoid any gaps in coverage.
When was the last time you reviewed or updated your homeowners insurance policy?
Coleman Agency is an insurance agency providing home and auto insurance in Clearwater. Contact us to conduct a home insurance review, including asset evaluation and current liability risk. Let our insurance agents help you get the best deal possible with a free quote.
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