How long has it been since you reviewed your homeowners’ insurance coverage? For most of us, it’s been too long. We just keep renewing the same policy we purchased years ago. After all, if it was good enough then it should be good enough now, right? Probably not.
As our lives change, so do our insurance needs. We become Airbnb hosts, start home-based businesses and hire domestic employees. We renovate our homes and acquire jewelry and other valuables. Changing circumstances bring about new risks that may not be adequately covered by your old homeowners’ insurance policy.
To avoid potentially devastating coverage gaps, homeowners should evaluate their insurance coverage in the context of their current circumstances. The annual renewal of your homeowners’ insurance policy is the perfect time to do this. Here are some questions to ask before renewing your policy.
Is my dwelling underinsured? In the worst-case scenario, you will need enough dwelling coverage to completely rebuild your home from scratch. This is unlikely with policies that pay actual cash value because depreciation is factored into the claim payout. Policies that pay replacement cost are preferable, but limits need to be adjusted to cover any additions or renovations that would make it more expensive to rebuild or replace a damaged dwelling.
Is my personal property underinsured? More years means more stuff. Personal property coverage limits should correspond to the value of your furniture, appliances, clothing and other personal property. If the total value of your possessions goes up, so should your limits.
Are my valuables covered? Standard policies substantially limit or exclude coverage for certain valuables, like jewelry, precious metals and firearms. If you acquired luxury items, you will need a Personal Property Floater (Scheduled Personal Property Endorsement) to cover them.
Do I have enough liability protection? Liability coverage protects you against third-party claims for bodily injury or property damage. Most homeowners should have at least $300,000 of liability coverage, but those with significant assets should have higher limits.
Do I have the right deductible? The deductible what you pay before the insurance company starts paying. Increasing deductibles may lower premiums, but it’s not for everyone. Before making a change, evaluate your current finances to make sure you can afford to pay a higher deductible in the event of a claim.
Can I bundle policies? Some insurers offer substantial multi-policy discounts. If you have other policies, like automobile or umbrella policies, find out if you can save money by bundling them together with the same insurance company.
Am I eligible for premium discounts? Renovations that reduce the risk of loss can also reduce premiums. If you recently replaced the roof, installed hurricane shutters, purchased a home security system or made other qualifying renovations, you may qualify for premium discounts or credits.
Do I need a separate flood policy? Hurricane Irma taught us that flooding isn’t limited to flood zones and that uninsured flood damage can be devastating. Standard homeowners’ policies do not cover floods, so if you live in an area that is (or is becoming!) prone to flooding, you will need a separate flood insurance policy.
We know that reviewing insurance policies is pretty much the last thing you want to do, but it has to be done. It’s better to understand the insurance coverage you have and discover the coverage you need before you have a claim instead of after.
Please contact us to learn more about evaluating and obtaining adequate homeowners’ insurance coverage.
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