- You should always review your current homeowners insurance policy at the beginning of the year and evaluate if you need more coverage.
- If you made renovations or improvements to your home last year, you’ll need to reassess the cost to rebuild your home based on increased market value.
- Review optional coverage, especially flood insurance because the majority of flood claims last year occurred outside of flood zones.
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A lot can happen to your home over the course of a year. You might’ve added a nice porch to your house that increased its value or perhaps a local flood came too close to your house for comfort. Regardless of the reason, you may find that the homeowners insurance policy you had a year ago isn’t the right fit for you now.
To ensure that your homeowners insurance policy is still appropriate for your house, go through a checklist at the beginning of each year. Here are six things to include in your annual checklist.
What to look for in a homeowners insurance company
Conducting research on home insurance is important to avoid overpaying for coverage that might not be necessary. On the flipside, there’s a risk that your house might be undercovered. In fact, only 30% of the respondents in a 2020 survey reported that they felt confident that they knew what they were paying for in an insurance plan.
The same survey found that lower-income households place more importance on a good user experience while higher-income households place more importance on an insurance company’s financial rating. Homeowners also indicated that they want greater flexibility in their coverage and costs. Meanwhile, a Consumer Reports survey found that an insurance company’s damage estimates had a strong correlation with customer satisfaction. Customers of lower-rated insurance providers found that their final settlements were too low.
It’s important for homeowners to shop around, compare quotes, coverage offerings, and research the financial stability and reputation of homeowners insurance providers, according to Bill Martin, president and CEO at Plymouth Rock Home Assurance.
Martin says that because homeowners insurance isn’t required — unless by a mortgage lender — sometimes homeowners don’t have high enough liability limits to protect their assets. An annual checkup and inventory of your policy coverage can help you stay on top of your insurance needs so you don’t end up without coverage.
Here’s a checklist for the beginning of 2022 to make sure you are getting the most out of your homeowners insurance.
1. Review your current homeowners insurance policy
The main goal of homeowners insurance is to replace or rebuild your home if it’s damaged. Martin says that if you made renovations or improvements last year that increased your home value, your limits should be reviewed and increased to reflect that.
He also recommends taking into account how much it would cost to rebuild if a fire burned the house. The cost to rebuild should also consider the cost of materials (lumber) and labor have increased.
It’s also recommended that you update your home inventory list and review it with your agent to make sure your limits are high enough to cover replacement costs. If you received high-value presents during the holidays, does your policy cover it, or do you need to increase your liability limits? Martin notes that expensive gifts that are damaged, stolen, or lost from your home may be covered, but there are limits (like with expensive jewelry).
2. Review your add-on rider coverage
Because homeowners insurance is not required by law, most people only get what’s required by their mortgage lender or condo association. However, if you live in areas where natural disasters occur, you may need extra coverage.
Martin said that unless homeowners live in a designated flood zone, they are not required to have flood insurance. However, he noted that last year the majority of flood claims were from people that didn’t live in flood zones and they were not covered under their homeowners insurance because flood insurance is optional coverage.
Martin said that when thinking about optional add-on coverage like flood insurance or pet insurance, do not focus on whether it has happened before. He said instead the concern should be about claims that could happen in the future. If you don’t already have coverage when “it hasn’t happened before” actually happens, you will pay out of pocket.
3. Consider combining multiple policies
Martin said that it can take a bit longer to find the right homeowners insurance provider and policy so people tend to get separate policies for pets, special jewelry, and high-value objects. He notes that homeowners insurance offers several add-on coverages like pet insurance and special jewelry so there’s no need to have separate policies.
It may also be cheaper to have a single policy. Martin suggests asking, “What optional coverage is out there and what riders could save money?” This is a conversation homeowners should have with their agent.
4. Make sure your home is weatherproofed
Martin noted that in the winter, homeowners in cold-weather states see damage from insurance perils like the polar vortex or the buildup of ice and snow that cause damage or accidents.
Martin said that many claims in winter are due to ice damage, and if you don’t have the tools to remove snow and ice from your roof or shingles, you should have a contractor do it, as this is cheaper than having a leaking roof or damaged gutters. He warned that homeowners are considered negligent for not clearing and removing snow or ice from sidewalks and driveways, which can lead to a personal liability claim.
5. Stay on top of home maintenance
Keeping up with routine maintenance is an essential part of owning a home. If left unchecked, small issues that might’ve been easy to fix if caught on time can accumulate into bigger problems down the road. It’s equally important to include preventative measures in your routine maintenance. For example, putting wire mesh over vents and plugging up holes in your house with steel wool will prevent rodents or birds from moving into the crevices of your house.
Routine home maintenance is especially important because homeowners insurance doesn’t cover wear and tear damage or damage caused by mold, rot, insect and termite damage, or bird and rodent damage.
6. Decide whether to switch providers
If your homeowners insurance company hasn’t provided the level of service you expected, maybe it’s time to select a new provider.
Remember that a cheap price doesn’t necessarily mean good customer service. The average cost for homeowners insurance will vary based on the state you live in and whether your home is urban or rural. Focus on customer satisfaction rankings, like those from J.D. Power, and comparison shop. This is especially important for those living in disaster-prone areas.