Whether your home insurance bill comes once a year or it’s rolled in with the mortgage or rent, it’s good to have an annual insurance review to make sure you’re properly covered. Insurance agents are happy to meet with their clients and answer questions. What home insurance questions should you ask your agent and what should you know before scheduling an insurance checkup?
What an insurance review shows
Many consumers think of an insurance review as a tedious chore. But year to year, changes can happen at home that impact your insurance, and you may not even realize it.
“They don’t think about it until the insurance agent starts asking questions,” said Tom Humphreys, director of The Risk Management and Insurance Center and assistant professor of Insurance and Risk Management at Olivet College in Michigan.
Here are some home insurance questions to ask about and some topics you should be prepared to discuss with your insurance agent:
Home: Have you made any alterations to your home, like upgrading the bathrooms or remodeling the kitchen? You may want to increase coverage since the home would cost more to rebuild in the event of a covered incident.
Assets: Have you purchased additional assets that might need coverage, such as expensive jewelry, cameras, fur coats or recreational vehicles? “These have limitations on your policy,” Humphreys said, so you should get riders that provide more coverage. If you sold property that was previously covered, like guns or electronics, you should take those off your policy. That could help save you money.
Home-based business: Have you started a home-based business? That’s not typically covered by a homeowners’ or renters’ policy without an “endorsement” (an amendment to your policy that extends coverage beyond the usual itemized terms) or a separate business insurance policy.
Family changes: Have you gotten married, divorced or added a child to your family? This might trigger a conversation about life insurance or investment accounts, and whether you need to make beneficiary changes to an existing policies or accounts.
Is the insurance review really a sales opportunity?
Humphreys said he understands why some consumers might be concerned that an insurance review would be a sales opportunity for the agent, but a good agent uses the time to educate his or her customers about coverage and learn about their needs. Some agents will recommend additional coverage based on the information, but often there’s no home or life changes requiring insurance modifications. It gives the consumer some peace of mind knowing they have the coverage they need, and offers a chance to ask homeowners insurance questions. If they do need more coverage, they make the ultimate decision themselves on whether to purchase additional coverage.
Questions to ask your home insurance agent
This is a good time to ask your agent the “what if” questions.
Discounts: Ask about discounts for which you might be eligible. You might have added home improvements and not told the insurance company. This could include the new smoke detectors or home security system installed in your home. Have you added a new roof? You might qualify for a discount based on the roof’s age. Insurance companies offer multi-policy discounts for carrying several insurance policies with them. “The more you can bundle your policies together with one carrier, the more cross-discounts they’ll provide,” Humphreys said.
Policy coverage: It’s a good time to ask your agent to explain how the coverage works. For example, if you have actual cash value coverage instead of replacement cost of your home structure, find out how that works and if it’s the best coverage for you. Ask what your policies don’t cover to determine whether you want other types of insurance as well, like flood insurance. Even if you don’t live in a flood zone, water damage can be expensive and more common than people think.
Deductibles: Reevaluate your deductible. Find out the difference in your annual premium with a higher deductible. “If you can recoup the increase in your deductible in premium savings in a five-year period, it [may] make sense to do it,” said Humphreys.
Recommendations: Ask whether there are other types of insurance your agent recommends, based on your discussion. This gives your agent a chance to explain policies offered that you may not have considered such as umbrella coverage, identity theft protection and liability insurance.
It’s important to ensure your insurance coverage is current and adequate for your needs. An annual review of your coverage can make your life easier and give you peace of mind. Call your agent to schedule a free On Your Side review today.