Once you purchase your first house and set up a homeowners insurance policy, you may think that your insurance needs will be taken care of for as long as you own the house. However, reviewing your home insurance policy on a regular basis is essential if you want to fully protect your property. Just like your property needs regular maintenance to stay in tip-top shape, your insurance also needs regular adjustments to ensure it meets your needs.
The Importance of Regular Policy Checkups
When you first set up your insurance plan, you secure a certain amount of protection based on the current value of your house and any risks associated with your property. This gives you the ideal level of coverage without stretching your budget. As time goes on, however, both the value of your home and the type of coverage you need can change.
If you add a new addition to your home, or your house has a significant increase in value, your original homeowner’s policy simply might not cut it. In that case, you could be vulnerable if a natural disaster, accident, or other event hits your house. Even with natural disaster coverage, your policy might not fully account for the increased value of your property, leaving you unprepared for costly out-of-pocket repair bills.
Incorporating disaster preparedness into your financial planning can help you avoid these unexpected expenses. Although you may find that your new policy is a bit more expensive, home insurance is worth the extra cost because it safeguards your full investment.
Additionally, if you have a mortgage on your home, your bank may require you to maintain a certain level of coverage. If your home insurance policy is no longer in compliance with your lender’s needs, they may take matters into their own hands and purchase an expensive policy to secure their investment, which you’ll have to pay for through your mortgage. Being proactive and updating your plan regularly puts you in control, helping you pick coverage that fits your budget while also meeting the specifications of your mortgage.
Insurance reviews can also protect you from overpaying. If something happens to decrease the value or risk level of your house, you may no longer need the same level of protection. In that case, regularly reviewing your home insurance would help you save money on unnecessary riders and additions that you no longer need.
Identifying Your Coverage Needs
During your policy review, it’s important to be realistic about the level of coverage that you need for your home and your lifestyle. To make an accurate assessment, start by considering any changes that occurred since your last plan update.
Assessing the Impact of Life Changes on Your Insurance
As your life changes, your coverage needs also evolve. If you do a major project on your home, such as building a new addition to expand your family, you’ll want a plan that accounts for this added value to your home. If you get married or move a partner into your house, you’ll also want to account for any new valuables in your policy. Similarly, if someone moves out of your house, you may no longer need a high limit for your personal property coverage.
If you started a business in your home, you might also need an additional business owners policy to keep you covered. Even if your homeowners insurance covers other types of property, it might exclude coverage for business-related liabilities. By talking to an agent about the changes in your home life, you can determine which events are relevant to your policy review.
Keeping Up with the Market: Evaluating Property Values
Property values are one of the most important aspects to consider when assessing your homeowner’s insurance. Because real estate often increases in value over time, you’ll want to ensure you have full protection for your investment.
For example, if your property was worth $150,000 at the time of purchase, you probably only insured your home for that amount. However, after years of inflation and property value increases, it might cost hundreds of thousands of dollars more to repair or rebuild after serious damage. If you find that your home is now worth $300,000 during your annual property appraisal, you’ll want to make sure your policy limits reflect that new amount.
How Often Should I Update My Home Insurance?
If you want to get the right combination of protection and cost savings, reviewing your policy on an annual basis is usually a good rule of thumb, especially since most home policies last for about a year before you need to renew. You can also take this opportunity to find cheap home insurance online and make sure you’re getting a good deal.
If you’re planning to make a major upgrade or change before renewal time, you may wonder, “Can I change homeowners insurance at any time?” The answer is yes, but you’ll still want to be strategic. If you want to change providers entirely, you may have to pay a fee for ending your policy early. Carefully planning upgrades and additions around your insurance schedule can help you avoid fees and maximize savings during your policy review.
Updating Personal Information
As you update your home insurance during your annual review, take some time to make sure your personal information is up to date. Having the right phone number and contact details on file will help the process go smoothly if you ever have to make a claim.
Reflecting Personal Assets and Possessions Accurately
Along with assessing the value of your home itself, you’ll also want to consider the level of coverage you need for your personal belongings and other assets. Homeowners policies will offer a certain level of protection to account for your personal possessions. If you recently purchased or inherited highly valuable items, such as jewelry or artwork, you may want to raise your policy limits or add a rider to ensure these precious belongings are fully covered.
Dealing With Specific Additions
Various updates and changes to your house will impact your insurance in different ways. Understanding how different additions could alter your policy can help you plan ahead.
Addressing Major Renovations and Home Improvements
You don’t need to contact your insurer every time you decide to paint your living room a new color, but you will want to reach out before planning major additions. If you want to construct a new structure, add another story to your house, build a deck, or alter the actual structure of your home in a major way, you should contact your provider to discuss how the change will impact your coverage. They’ll give you a quote and explain what kind of documentation you need to avoid any denied claims.
Welcoming Pets: Adjusting Your Coverage Accordingly
Did you know that your pets can actually impact your homeowners insurance? Namely, insurance may handle any damages your animal causes to other parties. Limits can vary, so you may want to review your plan and add supplemental coverage if you want extra peace of mind. Not all breeds get the same coverage so be sure and check with your insurer.
Recreational Add-Ons: Pools, Trampolines, and Their Insurance Implications
Certain upgrades may increase the value of your home while also adding additional risk. For example, in-ground pools can provide a luxurious experience, but they can be dangerous without the proper safety precautions. When adding these high-risk recreational additions to your home, you’ll likely need to prepare for higher rates to offset the potential claims.
Need a Better Home Insurance Plan? Sign Up with Freeway
By regularly assessing your homeowners policy, you can make sure your plan gives you the exact level of coverage you need. Annual updates will help you avoid unexpected denials, so you can protect your full investment in your house as you grow your family, improve your property, and beyond.
If you’re reviewing your current homeowners coverage and aren’t satisfied, it may be time to switch. At Freeway, you can find comprehensive, reliable coverage for your home, regardless of how your lifestyle grows and changes through the years. Learn how Freeway can protect your lifestyle by stopping by a local Freeway Insurance office, getting an online quote, or calling us at 800-777-5620.
