If you own a home, you need to have homeowner’s insurance in place. The bank or mortgage lender requires it, and in some cases, the cost will even be added onto your monthly insurance, kept in your escrow account and paid by the bank. Even if you have no mortgage, you still need to have homeowner’s insurance in order to protect your investment and your finances.
However, while all homeowner’s need to purchase homeowner’s insurance, many buy it once and then assume they are done. The reality, however, is that your homeowner’s insurance policy should be periodically reviewed to ensure that it is still meeting your needs. If you haven’t yet reviewed your policy, now is the time- resolve to do it as soon as possible.
What to Review On Your Policy
You should have a copy of your homeowner’s insurance policy and if you don’t, you can contact your insurer in order to obtain one. When you take a look at your policy, there are several key things that you will want to review. These include:
- Your liability coverage. Homeowner’s insurance does more than just protect you if your home or possessions are damaged. If someone sues you, liability coverage pays the bills and damages up to coverage limits. You should review this liability coverage to make sure you have enough to protect your assets. If circumstances have changed that could affect your coverage, such as acquiring a potentially dangerous dog for example, then you need to let your insurer know so you don’t do anything to violate the policy and jeopardize the coverage.
- Your coverage limit on the home and your possessions. You should have a replacement cost policy, not a market value policy. Replacement cost ensures that if the home is totally destroyed, you’ll be paid enough money by the insurer to replace it in full as it was constructed. Market value, on the other hand, would provide you only with insurance coverage based on what the home and possessions were worth on the open market. This might not be enough to replace. Be sure you have replacement cost coverage and that it is enough to fully pay for your home and possessions if they were destroyed. If your home has been upgraded or if you bought more expensive stuff, then you should up your coverage limits.
- The types of insurance you have and might need. Sometimes, requirements change. For example, the definition of a flood plane may change and you may find that you need flood insurance when you never did before. You might also change your circumstances, such as acquiring an expensive engagement ring that isn’t covered under a standard homeowner’s policy. If you have additional coverage needs or want to drop some type of coverage, then you will need to let your insurer know. A review of your policy brings these issues to light.
Some people also want to periodically shop for less costly homeowner’s insurance and you have the option of doing this when you review your policy as well. The most important thing, however, is making sure that you have the coverage and protection you need from your homeowner’s policy.