Like most people, we filed away our insurance policies on the day we received them and didn’t bother to look at them again. A recent fender bender, however, prompted us to review our auto policy and a call to our insurance agent revealed that we were underinsured in several areas while missing opportunities to save in others.
“Just like we do an annual physical, we should also take care of our financial health, and that includes talking with our insurance agent every year,” said Loretta Worters, vice president of the Insurance Information Institute (I.I.I.). “Over the years our lives change. Some of us get married, have children, divorce. These life stages can have an impact on our insurance coverage.”
The I.I.I. recommends reviewing your homeowners and auto insurance policies once a year or whenever you undergo a major life change. In addition to ensuring that you have adequate coverage, a review can help you identify potential savings.
Here are some areas the I.I.I. suggests you consider when reviewing your homeowner’s and auto coverage:
Have you done extensive renovations to your home? If you’ve added a room or updated your kitchen or bathroom, you are probably underinsured if you haven’t notified your insurance agent. If you added any outside structures, including a hot tub, pool or a shed, you should also inform your agent. Installed a fire or security system in your home? You may qualify for a discount
Have you gotten married? If you are merging two households you will need to update your homeowners insurance to reflect your combined holdings. You may also want to increase your insurance for such valuables as wedding and engagement rings. If you are a two-car couple with policies from different companies, look into which one will give you the best coverage, price and service. You should also investigate the savings potential of insuring both your auto and home with the same company. Some insurers will offer discounts if you bundle your policies.
Have you gotten divorced? If you and your ex are no longer living together, you will need to notify your insurer to request separate auto and homeowners policies. You should also discuss reducing your coverage if household items of value have been removed.
Have you acquired any new valuables, including jewelry, electronic equipment, art or antiques? Standard homeowners policies offer only limited coverage for valuable items. If you have recently purchased or received items that exceed the limits of your policy, consider adding a “floater” that will provide additional insurance for your valuables. The I.I.I. advises that you have items such as jewelry, art and antiques appraised before purchasing a valuables floater. In addition, keep receipts for new items of worth and take photos of all valuables for your records.
Has your child moved away to attend college? If your child left home for college you should review your homeowners policy to determine if such items as her computer, printer, bicycle, furniture and stereo equipment are covered. This is especially important if your child is living off-campus. Talk with your insurance agent to find out if your homeowners coverage will extend to her apartment. If it doesn’t, you might want to consider renter’s insurance to protect her personal property if it is damaged, stolen or destroyed. If your child is taking a car with her, check your policy to see if she will be covered in a different city or state. If your child will be away and not using a car for most of the year, you may be eligible for reduced premiums.
Do you have an umbrella policy? An umbrella insurance policy provides you with extra liability protection beyond that offered by your existing policies. Umbrella policies are typically offered for both home and auto insurance, and are relatively inexpensive. Depending on the insurance company, you can add $1-5 million in extra coverage that will kick in when you have exhausted the liability coverage on your home or auto policies. Umbrella policies cover such expenses as injured persons’ medical bills and rehabilitation and legal costs if an accident happens on your premises or if it is your fault.
Do you have a shorter commute or have you retired? Traveling shorter distances can mean a lower premium. If you have reduced the miles you put on your car you may be eligible for a low-mileage discount. In addition, some insurance companies give drivers over the age of 50 or 55 a discount.
Your home and car are major investments. As we discovered, an annual review of your insurance coverage will provide peace of mind that you are adequately safeguarding two of your most important assets.
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