Homeowners insurance is easy to forget about, especially if your bill’s paid through an escrow account. Unfortunately, failing to review your insurance on a regular basis can have costly consequences.
Not only could it mean paying more than you should for your coverage, but it also may leave you under-covered and vulnerable to serious financial loss should a disaster hit.
Want to be sure you’re always covered, not to mention getting the best deal possible on your policy?
Here are the five times you should shop for homeowners insurance:
1. When you’re buying a home
If you’re using a mortgage loan to buy a property, your lender will require a homeowners insurance policy to protect their collateral. Lenders take a lot of risk in loaning out cash, and if you fail to make your payments, that home is key to recouping their losses.
Having a comprehensive insurance policy on the home ensures it will be in good condition should that ever occur.
2. When you update your home
Anytime you renovate your home, add a new system or feature, or even remove something (maybe you tore out that old wood siding and replaced it with vinyl), then it’s time to revisit your insurance policy.
For one, your updates could change the value of your home and how much coverage it needs. The changes could also make insuring your home more or less risky, which also affects your rates.
Adding a pool, for example, means significantly more liability risk. You’d need additional coverage to account for that risk, and you’d also pay more as a result.
Finally, your updates might qualify you for a discount. Many insurers offer premium reductions and other incentives for adding security features or certain smart home technologies.
3. When you bring home new occupants (even animal ones).
If your adult children move home, you get married, or you bring in a new dog or cat, reviewing your homeowners coverage is critical. For one, you need to be sure all occupants are properly covered — as well as any belongings and valuables they bring into the house.
If some of those new occupants are pets, then you may need additional liability coverage, too. This is especially true if you’ve brought home a dog breed that’s known to be aggressive.
4. When you buy something valuable.
If you bring in any high-dollar items – things like jewelry, artwork and even musical instruments – then you might want to extend your coverage.
This ensures your policy will cover the costs to replace the item should it be stolen.
5. Every two years, even if you haven’t changed anything.
At the very least, make it a point to check in on your insurance every two years. Insurance rates can change annually, even if you haven’t filed a claim. Getting a few quick quotes could save you big — possibly hundreds or even thousands per year.
Here are just a few reasons your rates could be lower after just a year or two:
- Your credit score may have improved. Your credit score can play a role in your insurance rate. If your score increases, it might qualify you for a lower premium.
- Construction costs might have changed. Your homeowners insurance covers the costs of rebuilding your property should something happen to it. If the costs of that rebuild change — maybe lumber prices or labor costs drop in your area — then your coverage amount (and the costs of that coverage) would drop, too.
- Rates may have dropped in your location. Insurance rates are highly localized. They take into account area crime rates, fire and flood risk, and any natural disasters that have hit the area. When these factors change, so do rates, which could mean a better deal on that premium.
Most insurers offer online quotes, so comparing premiums and coverage options is both quick and easy. If you do find a better deal out there, make sure to give your current insurer a chance to beat it. Many companies will offer steep discounts to retain an existing customer.
The bottom line
Having a comprehensive insurance policy is critical as a homeowner, so don’t get complacent. Make sure you’re updating your coverage with every update and change in the home, and make it a point to review your policy and premium at least every two years. This will ensure you’re getting the best deal possible.
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