If you’re like many Americans, it seems that each season is busier than the last. Between hectic holiday months, annual spring cleaning, summer vacations, and back-to-school chaos, one thing that may slip the minds of homeowners is checking in on their homeowner’s insurance policy
While not required, home insurance is a smart purchase, as it will protect you and your family from financial hardship in the event of theft, vandalism or fire. However, having an insurance policy is only helpful if it properly covers your possessions and the value of your home.
You likely purchased home insurance when you bought your house. At the time, it was probably appraised for a certain value. If you have lived in your home for a number of years, there’s a chance the value has fluctuated at least a little bit. Plus, you have probably brought more belongings into your home that you want covering under your policy. Because of these factors, it’s important to perform an end-of-year homeowners insurance policy review.
Where Should You Start?
The first thing you should do is to review your insurance policy, as there may be changes in your home since the last time you bought your policy. It is advisable to take note of what has changed before the review of your policy. As Consumer Reports points out, renovations and additions like upgrading your kitchen, adding a deck or installing smart technology can boost your home’s value. What have you changed or added since the initial policy purchase?
If you have children, you may have decided to give them electronics last Christmas, Hanukkah or just as an end-of-year gift. Or, maybe you recently treated yourself or your partner to something nice. Some homeowners may not be aware that not all their expensive items are automatically covered by a standard homeowners insurance policy. To ensure coverage, it’s up to you to include all new expensive or luxury items on your policy. Now is the perfect time to create a home inventory. The Insurance Information Institute offers these handy tips:
- Start with recent purchases and work backward
- Prioritize big-ticket items like art, jewelry, and antiques
- Take photographs of individual rooms, drawers, and possessions
- Perform a walk-through video and describe the contents as you go
- Create an electronic inventory or use list-making software
Next Step: Figure Out Who’s Covered
For some households, figuring out who is covered by your insurance is easy. The named insured, his or her spouse and any children are covered, according to 360 Degrees of Financial Literacy. In fact, anyone who lives in your house is under the care of one of the residents of the home, is younger than 21 or a relative is covered by your homeowner’s insurance policy. For instance, a child that is older than 21 is covered, but a friend who lives in your home and is older than 21 may not be.
Some families may not be sure exactly who is covered, especially if they have people in their home regularly. Generally, anyone you invite onto your property or hire is insured under your policy. Guests, nannies, and housekeepers all qualify. However, if you are renting out a portion of your home or the entire house, various insurance carriers will have different restrictions on who is qualified for coverage.
An apartment with a renting tenant may need his or her own renter’s insurance policy if the entrance to the living quarters is different than the one to the main house, or if the renter is not related to the named insured. Only your insurance provider will be able to tell you whether the renter will need a separate renters insurance policy.
Homeowners may be curious as to whether their children who go off to college remain covered under their policy. Great question! As the National Association of Insurance Commissioners writes, college students under the age of 26 who live in on-campus housing (like a dorm) may be covered under their parents’ policy. Families may want to add floating policies to cover expensive items like electronics or sporting equipment in this case. On the other hand, students living off-campus will likely need to enroll in their own renter’s insurance policy to protect their belongings.
Talk to the Experts
Once you know which aspects of your insurance policy you may need to update or change, get in touch with your insurance provider and ask to meet to review your policy. During your meeting, explain the changes that have occurred, whether they are related to the appraisal value of your home, expensive belongings that should be covered and any change in residents of the house. Your insurance agent should be able to explain the best course of action regarding these changes.
Homeowners should also ask about flood or earthquake coverage. These typically aren’t included in the average homeowner’s insurance policy. However, there are certain areas of the U.S. that are more exposed to these natural disasters than others. If you live in a state that ranks highest at risk for flooding in the next 100 years—like Florida, Louisiana, California, New York or New Jersey—you may want to inquire about flood insurance. Likewise, residents of the earthquake-prone states of California, South Carolina, and Utah would likely benefit from adding earthquake insurance to their policy.
Before the meeting is over, don’t forget to ask about homeowners insurance discounts you may be missing out on, as Realtor explains. Updating your home’s roof or security system may earn you a percentage off your premium. Even changes to the neighborhood surrounding your home could qualify you for a discounted rate, such as a new fire hydrant going up across the street. Discounts are a good way to save you some money, though some insurance agents won’t disclose details about them unless you take the initiative and ask