The Case For An Annual Insurance Review
So you’ve got insurance on your home, car, boat, life, and health. You’re doing just fine, so there’s no point in giving it a second thought, right? Wrong. Purchasing a policy today doesn’t mean that it will be the right one for you in a few years. Life changes happen, both good and bad, and in each case, it can call for some adjustments.
We recently turned to agent Tim Waltrip, one of our friends at Allstate, about the need for an annual insurance review. Whether you’re an Allstate customer or buying your insurance somewhere else, this is valuable advice.
What Are The Benefits Of Reviewing Your Policies Annually?
If you’re like most insurance-minded Americans, then you tend to forget about your insurance policy once it’s been purchased. This is particularly true for homeowners, who tend to purchase a policy and then get sidetracked. Waltrip acknowledges that many customers don’t understand the importance of coming back to those coverage limits later on.
“It’s an oversight that can ultimately lead to a gap in their coverage,” he explained in a recent post on the company blog. “For instance, you may have insured your home for $200,000 when you first bought it. A decade later, your home may cost $300,000 to rebuild. That’s a $100,000 gap in coverage — which could leave you without the proper resources to rebuild in the event of a loss.”
Homeowners also forget about the cost improvements they make to their home whenever they undertake a home renovation or upgrade. An insurance review, explains Waltrip, “can help ensure that your home and belongings are fully protected, and that your coverage is keeping up with your current needs.”
He adds: “Everything from new furniture to a kitchen upgrade can affect the value of your family’s home, and may even qualify you for additional discounts on your insurance policy.”
Waltrip urges homeowners to conduct a home inventory in order to evaluate their needs. “There are tools and even smartphone home inventory apps, like Digital Locker, that can streamline the process,” he notes.
What Questions Should You Be Asking Your Agent?
After scheduling a sit-down with your agent, you should do your homework and prepare a list of questions to ask regarding your insurance. When it comes to home ownership, Waltrip recommends the following:
Does my policy provide enough coverage to rebuild my home today?
Homeowners are often taken off guard when they discover they’ve been carrying an outdated policy. As Waltrip notes, “Changes in construction costs [which can vary year after year], upgrades to a kitchen or bathroom, new kitchen appliances, or updates to a basement can all affect the cost to repair or rebuild your home.”
When meeting with your agent, make sure you’ve told him each and every improvement that you’ve made to the home. Together you can come up with a realistic number for what it would cost to rebuild the home if something should happen in the year ahead.
How does a newly finished basement affect my policy?
The finished basement is a favorite for homeowners, particularly those interested in building a den, game/media room, or home theater. However, choosing to go this route can greatly affect the cost of rebuilding your home because it adds heated living space. “A finished basement may not only increase the cost to rebuild your home,” Waltrip interjects, “but it may also require additional coverage to protect items from water damage.”
Does my policy provide enough coverage for landscaping or outdoor appliances?
Don’t lose sight of the surrounding property whenever you’re calculating rebuilding costs. If you want to fully recreate the experience that you had before a catastrophic event, it will include landscaping as well as home damage. “Installing a new sprinkler system, a larger storage shed, a new pool or hot tub, or buying a substantial backyard grill or riding mower are outdoor changes that may require a homeowner’s policy upgrade,” Waltrip said. “Updating landscaping and purchasing new lawn equipment or outbuildings can be significant investments that should prompt a coverage review.”
Do I need extended coverage for valuables?
A homeowner’s existing policy will provide standard coverage for home and belongings, but you would be surprised just how much said homeowner overlooks when calculating coverage. For example, notes Waltrip, “you may need additional coverage for wedding rings, valuable golf clubs or other sports equipment, family heirlooms and antiques, musical instruments or artwork in your home.”
Furthermore, a home office might benefit from business insurance.
Do I qualify for discounts?
Each time that you take part in an annual insurance review with your agent, you should ask about available discounts. For example, if you installed a security system, then you might qualify for a discount that you didn’t qualify for previously. “Additional discounts may apply if you insure both your car and home with Allstate,” Waltrip claims, adding that that is “if you don’t have any claims, or if no one in your household is a smoker.” The same is true for many insurance companies, large and small.
Annual insurance reviews are the most overlooked necessity in the insurance portfolio of a customer. While your home may be the policy that requires the most attention, don’t exclude your other policies. If you get married, divorced, have a child, or lose a loved one who was a beneficiary, you may find yourself in need of a review on other policies. Don’t let it fall by the wayside.