The Need for an Annual Insurance Policy Review
The purchase of a homeowner’s insurance policy is one that individuals make when the need arises but tend to ignore except when the time comes to pay the premium. Do not overlook the need for an annual home insurance review. The review ascertains that your policy is up-to-date, that the home remains properly insured, and will prompt a discussion with your agent as to whether you have additional insurance needs that may have cropped up since the last review.
Here are some of the items you should review with your insurance agent on an annual basis:
- The replacement cost of your home: The necessary insurance coverage amount on your home is subject to increase over time and your policy should be updated accordingly. During the review, you should also discuss any personal property changes with your agent. For example, have you begun collecting items that may need to be insured on a separate policy? Do you have more computer equipment in the home but not enough insurance?
- Is your home in a flood zone: Keep in mind that the federal government and local municipalities upgrade flood zones on a regular basis. If your home is in an area that has been recently designated a flood zone, you may need to consider adding flood insurance.
- Property liability limits: While there is no way to completely protect yourself against a lawsuit, it is crucial that you have proper liability limits in place. If you’ve added a swimming pool to your home, for example, you will need to update your liability coverage.
- Are there other “common perils” to which your home may be exposed? These common perils include earthquakes, floods, or windstorm coverage. If you discover that your current homeowner’s policy excludes coverage for these perils, you may want to purchase a policy that will offer protection against these events.
- Is your deductible still one that you can easily cover in the event of a loss? If, when you purchased the policy, you were able to easily afford a $1,000 deductible is that still the case? In some instances, individuals that have lost a job or have lost their savings may not be able to come up with that deductible. It may make sense to lower the deductible to one that is easier to manage. Bear in mind though that lowering the deductible on the policy will cause an increase in the annual premium.
These are five of the main items you will want to discuss with your insurance agent during your annual review, but a discussion will likely prompt other questions.