To ensure that you’re efficiently spending your money to get maximum protection for your home and personal belongings, you’ll need to conduct a thorough New Year’s insurance audit. Changes to your house and the local property market may have occurred since the last time you reviewed your homeowner’s policy. With a fresh annual insurance review, you’ll have an opportunity to update your policy and save money or fill crucial coverage gaps.
Why Conduct a New Year’s Insurance Review?
A coverage audit lets you reevaluate your home insurance needs and determine whether your property is covered for its total replacement value. The value can change due to many factors, including an increase in the price of construction materials. Without regular insurance review, you may end up with a coverage gap worth tens of thousands of dollars in less than a decade.
Few Important Variables That You Should Specifically Consider During the Review
Regardless of the coverage type, all insurance plans are based on fundamental principles. Here are some of the essential variables you should consider while doing an insurance review.
- Type of Policy
The first thing you should know while reviewing your insurance is what type or subtype of insurance policy it is. For example, is it life insurance, personal insurance, health insurance, long-term care insurance, property and casualty insurance, or vehicle insurance, and what does it offer?
- Issue and Expiry Date
While some coverages are for life, most cover only a specific period. So you need to know your policy’s issue and expiry dates. In some cases, your insurance might be automatically renewed, in which case, you should see the date of auto-renewal.
- Amount of Premium
Always keep track of the premium you pay and how often you pay. If you pay the premium upfront, keep a separate record of that.
- People Insured
It’s important to know who all are insured under the policy. For example, does it cover your spouse, children, parents, or just you? In the case of auto insurance, find out if it covers other drivers.
Your beneficiaries will receive your the policy’s benefits. So, review your beneficiaries from time to time so that the right people are insured.
Practical Tips for New Year’s Insurance Review
The annual audit is also an opportunity to ask your insurance agent whether key improvements you made on your property may affect your future insurance premiums and liabilities. Here are some feature upgrades or property enhancements worth discussing with your agent.
1. What’s your property’s replacement cost today?
After rebuilding your kitchen, bathroom or adding a detached structure like a garage, your property’s replacement cost goes up. It’s vital to reflect that on your policy to avoid being underinsured.
Be sure to delve deep into details, like upgrading from standard to custom kitchen finishes; the latter will cost more to replace, so it impacts your premiums. Also, don’t forget to mention newly installed plumbing lines or electrical systems since they also affect the cost of rebuilding your house.
2. Water damage and your newly finished basement
Furniture and other items you keep in your newly finished basement are at risk of water damage in case of leaks. Your insurance agent can tell you whether this new risk requires a separate cover.
3. Is your new sports equipment or a piece of rare artwork adequately covered?
If you bought new electrical appliances, furniture, or clothing, you should update your standard homeowner’s coverage with the recent acquisitions. However, this may not be the right cover for valuables you recently added to your inventory. For example, you may need extended coverage to fully protect any new jewelry, wedding rings, artwork, or golf clubs in your home.
Let the insurance agent know about your new home office, too. For example, does your homeowner’s policy cover your type of business? Do you need a separate cover to protect your home business equipment?
Not all changes in your home will trigger a spike in your premiums. Others may qualify for a discount on your homeowner’s policy significantly if they can help mitigate the covered hazard. For instance, installing a fire detection system minimizes the risk of a fire disaster at home. Likewise, while a new hail-resistant roof may increase the cost of rebuilding your property, it may also entitle you to lower premiums.
5. New outdoor features and equipment
Adding new lawn care equipment, such as a riding mower increases the value of your home. A new sprinkler system and swimming pool have a similar impact. Be sure to determine the effects of such features on your policy. Don’t forget to discuss liabilities that may come up due to your new pool—those may impact your premiums, too.
These are the critical New Year’s insurance review tips you should consider implementing to protect your property. For any questions about updating your homeowner’s insurance policy, visit the C.V. Mason Insurance Agency team. Our home insurance policies work to protect residents in Bristol and neighboring cities in Connecticut. Give our experts a call for more information.