An annual review of your homeowners insurance policy allows you to identify and address any gaps in your insurance coverage. It ensures that you are adequately covered and that you are paying the right amount in premiums.
Why you may need a policy review
As a home owner, there are several considerations or situations that may necessitate you to review your policy:
- Lapse of your original policy. Most policies are set to renew automatically. You will typically receive information from your insurance company ahead of time, but it is always good to check for with your agent to understand your policy renewal process.
- Home renovations. If you have done some remodeling work including an addition and/or conversion since the last review, then it is imperative to consider a policy review. However seemingly small in scale the renovation may be, it may have significant impact on the terms of your insurance coverage.
- Addition of new valuables. Contents insurance is just as much a part of a homeowners insurance policy as the buildings and property insurance. Whether new and expensive electronics, luxury items or any other valuable, these changes to your inventory affect the amount of coverage you may require. You are also legible for a review where you may have under- or over-estimated the value of your possessions.
- Safety improvements in the home. Installing an operational home alarm and security system and protective devices such as deadbolts is a major home improvement that will undoubtedly help you save on the insurance premiums you should pay. Discounts for safety improvements are commonly missed in a less-than-thorough review.
- Purchasing a second home. You will need to review your policy if you have bought a second home within the year since your last review and have not taken an insurance policy cover for the second home independently.
- Change in replacement costs. A change in the cost of rebuilding your home will also affect your coverage, therefore calling for a review.
Selecting the Right Coverage
We typically recommend the “replacement costs” as the ideal coverage for your policy. This covers you, up to the determined limits of your policy, for the full amount that it would cost today to rebuild your home and restore all the belongings therein. The “actual cash value” coverage, in contrast, considers the market value of your home, taking into account depreciation due to wear and tear over time.
An extended policy provision in the replacements costs coverage compensates for any changes in construction costs in the interval between renewals. Material costs, availability, and cost of labor forces are the leading factors that affect construction costs.
A comprehensive review of your homeowners insurance policy should include adjusting your coverage such that it reflects current and updated estimates to rebuild or replace your home. Your agent can help you through this process and provide better details for your particular situation.
Perform the Review Today
The insurance industry is dynamic and rates are ever changing. It is not uncommon to find that there are major gaps in your coverage or that you are over covered.
Click here to start your free quote today for your homeowners insurance policy. We appreciate the opportunity to assist you in getting the best value for your money, and making sure that your home and family are adequately covered.