Your home requires regular maintenance — and so does your homeowners insurance. Updates to your house and belongings can affect whether or not you’re adequately insured. To make sure your home is properly protected, plan an annual homeowners insurance review to determine if you may need to adjust your coverage.
Why is it important?
Sitting down with your agent for a thorough policy review will help you select a coverage amount that best meets your needs.
What will affect coverage?
When you meet with your agent, discuss any improvements or changes you’ve made around your house over the past year. Here are some situations that may necessitate updates to your coverage:
- Home Renovations: Additions and remodels may increase the estimated replacement cost of your home. Even if it’s just a small change, it is important to determine if the changes affect the replacement cost of your home.
- Inventory Changes: Life-changing events, such as combining households or a child moving out, could increase or decrease the amount of coverage you need for your personal possessions.
- Safety Improvements: Adding a home security system can help you save on insurance premiums. Your agent can help explain additional discounts or endorsements available.
How do I select the right amount of coverage?
Most insurance companies recommends selecting a coverage amount at least equal to 100 percent of the estimated replacement cost — not the market value — of your home. The replacement cost typically differs from the amount for which you could sell your home because it factors in construction costs. These can change dramatically year over year due to labor supply and demand and the cost of building materials in your area. Market value varies based on market conditions, which can vary considerably from construction costs. The amount you paid for the house may have no bearing on the current replacement cost or market value.
To keep your coverage current with replacement costs, have the estimated replacement cost of your home updated and adjust your coverage to reflect the current estimate to rebuild your home.
Keir Jones is a small business owner in Long Beach who loves to explore, try new foods and events, while working to build a better city through community involvement and helping protect his clients from the unexpected and plan for a successful financial future as an insurance agent.