It’s not something that is typically at the top of our to-do list, but every homeowner should do a review of their homeowner’s insurance policy at least once a year. While it’s easy to assume that little will change from year to year, things such as coverage for natural disasters, adjusting deductibles and renewal rates should be looked at before you renew your policy. In order to stay fully protected, here are a few key areas to focus on so that you’re guaranteed to get the most bang for your insurance buck.
Start with a review of your property’s value. While it’s common to base your coverage level on your home’s appraised value, consider using recent per-square-foot replacement costs in your area (provided via your local Homebuilders Association) as a reference instead. Land can make up a different percentage of the average home’s value depending on where you live, so it doesn’t hurt to do a little extra research and adjust your coverage level if it will benefit you.
Don’t forget to pay attention to the geography of where you live. If your area is prone to natural disasters, then you may be entitled to extended or guaranteed replacement policies that are designed to protect you from inflated material and labor costs following a calamitous event. Depending on your location, be sure to check that flood or earthquake insurance is offered. If not, you may want to consider additional coverage. Check out the National Flood Insurance Program’s website to determine your home’s risk area and to purchase the right flood insurance for you. For earthquakes, be sure to check with your insurance agent for insurance options that are specific to your state.
While natural disasters may be on your radar, don’t forget to review your policy for issues such as mold, sewage backups, or even broken pipes caused by a lack of routine maintenance. These are common exclusions on insurance policies and their damage can extend all the way to your wallet if you’re not careful to insure yourself properly.
If you have stayed on top of your home’s repairs, be sure to include these improvements in both your property’s value and your home’s replacement value. You never know when a fire or other tragedy may strike, and you’ll want as much coverage as possible to rebuild your home if it does. I recently checked the replacement value of a property I own and discovered I could increase it by 50%. That said, my premium did go up by several hundred dollars— but it was well worth it.
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If you’re making considerable upgrades to an older home, remember to check if your building code requirements are out of date and think about adding building code coverage to your policy.
In addition to your physical home, you should always keep your personal belongings safe. I find that having your jewelry appraised is helpful in the event that you ever experience a robbery. As you acquire these high value items, keep a digital inventory by either videotaping or photographing each piece that you want to be covered under your policy. Better yet, you can even conduct a home inventory and store all relevant items (photos, videos, receipts, paperwork) in a fireproof box. To be doubly safe, you can download all your pertinent information onto a flash drive and keep it somewhere outside of your home (in case of disaster). You can never be too prepared.
Lastly, look at your current premium. Beware that some insurers will shift their deductibles from set dollar amounts to percentages, which can cost you much more than you’d expect. For the best deal on premiums, aim for the highest deductible that you can afford. If you’re in the process of renewal, dig out last year’s documents and compare whether your rates increased. If you see a change of 5% or more, give your insurance company a call.
While you’re at it, investigate the kind of policies that are offered by your insurance company. Many companies provide a multi-policy discount if you already have policies like automobile insurance with the carrier. You can also ask about umbrella policies, which can provide additional coverage on certain claims should you exceed your current policy limit. When compared to the amount of coverage that they provide, it’s a relatively inexpensive investment. For more information on all things home insurance, check out The National Association of Insurance Commissioners’ consumer’s guide.
Jeanette Pavini is an Emmy Award winning journalist specializing in consumer news and protection. She is the author of “The Joy of $aving: Money Lessons I Learned From My Italian-American Father & 20 Years as a Consumer Reporter.” Jeanette is a regular contributor to TheStreet. Her work includes reporting for CBS, MarketWatch, WSJ Sunday, and USA Today. Jeanette has contributed to “The Today Show” and a variety of other media outlets. You can follow her money saving tips and ways to give back on Facebook: Jeanette Pavini: The Joy of $aving Community. Find links to her social media and her book at JeanettePavini.com.