The New Year is here for 2024, and you have probably made a list of resolutions involving everything from eating better to losing a bit of weight. One thing that should be on everyone’s list is a review and update of their homeowners policy.
The beginning of the year is a great time to pull out your insurance policy and make sure you are carrying enough coverage to protect your home and contents. It is also a great time to do a home inventory and to shop your policy around if you are looking for a new insurer.
A recent report by Safehome.org found that while many homeowners are experiencing increased costs when it comes to homeowners insurance, not many are actually shopping their coverage. According to the report:
- 43 percent of homeowners said their annual premiums increased in the last year.
- On 10% of homeowners are planning to switch to a different insurance company in the near future.
The beginning of the year is a great time to shop your coverage, looking for a better deal on your homeowners coverage. It is also an ideal time to make sure your home is fully covered, inflation and the rising cost of supplies has pushed up rebuilding costs dramatically in some areas.
The last thing you want is to make a claim and found out you are lacking in coverage. We have put together a few tips on how to start the year out right with your homeowners insurance.
Review and Update Your Policy
If you have made improvements to your house over the last year, now is a great time to review your policy and make sure you are carrying enough coverage. Finishing a basement, putting on an addition or even a kitchen makeover can all add value to your home and push up the cost of rebuilding should a disaster strike.
Inflation and shortages in the building supply and labor markets has also led to increased replacement costs which may mean your home is currently underinsured. According to a recent Insurance Information Institute study, replacement costs increased more than 30% cumulatively over the past five years. This is mainly due to escalating costs of construction materials and labor.
While higher replacement costs have diluted homeowners coverage, homeowners have not adjusted their coverage levels. A recent report from the American Property Casualty Insurance Association (APCIA) found that just 30% of insured homeowners have bought more insurance or increased their coverage limits to compensate for rising costs. This means that roughly two out of every three U.S. homes are at risk of being underinsured.
It is highly recommended that you verify you are carrying the proper coverage levels on your home on a yearly basis as well as coverage levels for other structures on your property. In some cases, you may need an additional policy for a detached garage, pool or storage structures. If you have a finished basement, consider sewer and drain backup coverage.
Flooding is not covered by a standard homeowners policy so if this is a concern you will need to purchase a separate flood insurance policy. The same is true for earthquake coverage, so if you live in an earthquake prone area, a separate policy will be necessary.
Review your personal property limits and up your coverage levels if necessary. Most policies put a cap on the value of certain items such as jewelry, art and furs so if you are over those limits you will need to up your coverage limits for those specific items.
Insurers have taken to inserting exclusions and limitations so read through your policy and make sure there are no gaps in your coverage. Common exclusions are mold, dogs, swimming pools and trampolines.
Do a Home Inventory
Dealing with the aftermath of a flood, fire or theft is hard enough, but if you don’t have a home inventory list your task will be much harder. You will have to remember and document every single item in your home that was destroyed if you want it to be covered by your homeowners insurance. A home inventory makes this impossible task much easier.
The best way to tackle a home inventory is to do one room at a time. Record all items and take a photo of them. If the item is an antique or has other qualities that add to its value, make sure you note this. Fill in as much detail as possible, including the brand, model number and serial number.
Take photos of everything as proof of ownership. While a video of a whole room will suffice in a pinch, taking individual photos of all of your items, as well as the serial numbers will make your claim adjuster happy.
A home inventory can be done with a piece of paper if necessary but there are dozens of apps available that can walk you through the process quickly and easily.
Here are three methods that have proven reliable and easy to use:
- NAIC Home Inventory App: The National Association of Insurance Commissioners created a home inventory app that is free for everyone. You can use this app to create a full home inventory, it allows you to take and add photos to your inventory as well as scan bar codes. You can also group your belongs by room and category. The app gets excellent ratings and is easy to use.
- United Policyholders Spreadsheet: If you want to keep it old school you can download this very comprehensive spreadsheet that United Policyholders has created. UP is a non-profit organization that creates trustworthy and useful information and resources for consumers regarding all types of insurance. This spreadsheet allows you to put in plenty of details, but it is a bit more labor intensive than an app.
- Itemtopia: This company has been creating apps for businesses to track inventory for years and now offers one for homeowners and small business owners. It is designed as a visual inventory so very easy to add photos and scan barcodes. You can organize your inventory by room or category. This app is highly customizable and gets excellent reviews.
Shop Your Coverage
If the New Year brought a rate hike it may be time to shop around for a new policy. Insurers rate risk differently which can lead to huge price differences for the same coverage. Shopping around is the best way to find a good deal on homeowners protection. If you find yourself looking for a new policy, here are a few quick tips on how to lower your premiums:
- Raise Your Deductible– Increasing your deductible from $500 to $1,000 can shave up to 25 percent off your premium. Be sure that you have an emergency fund set up to cover this increased cost.
- Bundle your coverages: A great way to save on homeowners coverage is to bundle your auto insurance with the same insurance company. This can result in a big discount, up to 25% in some cases.
- Install a Security System– The old adage is true, you have to spend money to make money. Installing a monitored security system will make your home a less tempting target for thieves and your insurer loves that. This can rack up a savings of almost 20 percent.
- Get Those Discounts – Homeowners insurance discounts and credits vary by insurance company but they all offer quite a few, make sure you are getting every single one for which you are eligible. Common discounts are:
- Senior citizen discounts
- Nonsmoker discounts
- Claim-free discounts
- Multi-policy discounts
Don’t Shop on Price Alone
While saving money is the name of the game, don’t forget that your ultimate goal is protecting your property from disasters. A less than reputable insurer that refuses to pay your claim is hardly a bargain. Stick to reputable insurance companies with top ratings and Get Your Free Homeowners Insurance Quotes Today!