When to Upgrade Your Homeowners Insurance Policy
Whether your home insurance policy is up for renewal or you’re in the market for a completely new provider, there are certain things that warrant upgrading your homeowner policy. Unfortunately, many people make the mistake of renewing the same policy year after year because they’re afraid that changing it will result in higher premiums. But sometimes quite the opposite happens! Upgrading your home insurance can lead to discounts if you’ve made certain changes around your home.
But that’s not the only reason to update your coverage. While everyone enjoys a good discount, the main reason you have homeowner insurance is to protect your house and personal belongings. Jonathan Crystal, executive vice president with Frank Crystal & Co in New York City told Forbes.com, “It’s a matter of good risk management and protecting your family and assets to go over your insurance coverage at least on an annual basis.”
If you haven’t updated your policy in 10 years, your coverage amounts are more than likely outdated. If your house caught on fire, your out of pocket costs could be tremendous. While no one likes to constantly search for insurance, updating your policy doesn’t have to be hard. If you take the time each year to re-examine your house and living situation, you’ll end up saving much more than just money. Here are several things that warrant an upgrade.
Buying a New Home
This may seem obvious but whether you move permanent residencies or purchase a vacation home, your policy needs to reflect all property. If you’re maintaining your previous residence as a rental property, make sure that your homeowner policy doesn’t include any exclusions pertaining to renters. You may need to obtain landlord insurance and purchase extra liability coverage.
If you have a vacation home, make sure that it’s properly insured. Many people dream of owning an ocean front house and while lazy beach days are relaxing, the hurricanes that follow can be devastating. Make sure all your homes are covered for the replacement cost value versus actual cash value. If you own a condo or a townhouse with a main homeowner’s association, be sure to check the master policy versus personal coverage. You’ll find that you may need more coverage than you think!
Remodeling a Home
Sometimes you have to bring new to you. Whether you purchased the house as a fixer-upper or need a complete overhaul after 20 years let your insurance company know about your renovation plans. Depending on how extensive they are, your policy may need updating before construction even begins. Just consider how many people will be working on your house. With power tools and electricity in abundance, an accident could happen. Make sure you have the liability limits to cover it.
Once you’re finished with a remodel, call your insurance agent again. With a serious remodel, the value of your home increases. This means upping your coverage limits to maintain the right replacement cost. Plus, if you make significant improvements, you want to make sure they’re covered in your policy. Today, many homeowners upgrade their home to have a lower environmental footprint, which will qualify you for a discount as well. And don’t forget any additions that aren’t connected to the house. If you add a garage or gazebo, it will need to be covered under secondary structures.
Additional Expensive Items
So you finally got that ring from Tiffany’s you’ve always wanted? Try not to focus on the shiny rock for too long without taking a look at your homeowner’s policy. This may not seem like an obvious next step but when you acquire expensive personal belongings, your coverage limits needs to reflect the added value and it’s possible the item should be scheduled. Some homeowner policies have per item coverage limits which mean if your $3,000 ring is stolen, you will only be reimbursed $1,000.
And it doesn’t just apply to jewelry. Many electronics in a person’s home need to be scheduled as well and if you consistently upgrade them, make sure your policy reflects the true value of your personal property. Things like artwork and antiques should be also appraised and scheduled. Along the same lines, if you sell any valuable property, make sure it’s removed from your policy.
You Get a Raise
Over time, most people continue to earn more but sometimes, a significant raise or drastic job change can bring an unexpected shift of circumstances. If you find that your lifestyle has either seen an influx of money or, as is the case over the past few years, a downwards spiral, consult your insurance company. If you’re lucky enough to increase your net worth, you will need to raise your liability coverage, which protects you from being sued. If your new position places you in the spotlight, consider purchasing umbrella coverage.
This provides extra liability protection starting at $1 million. Insurance scammers and fraudsters are always on the lookout for valuable people without the right kind of protection. If you’ve just been laid off from your job, don’t despair but also, don’t get rid of your insurance coverage. Consult your insurance agent to see if you qualify for any discounts that may have previously been overlooked. If you move to a smaller house or into an apartment, your policy could be more affordable.
Upgrading your homeowner policy may not be fun but it’s an essential part of owning a home. While no one likes to think about a disaster occurring in your neighborhood, many don’t entertain the idea to a fault. When it finally happens, it’s too late. While insurance can’t take the sting of a break-in or fire damage away, it can make it much easier to recover. Be prepared and always update your home insurance.