Home insurance renewal can be a simple “auto-renew” process, but it’s worth taking the time to review and update it annually. Life changes, home improvements, and shifting market values can all impact your insurance needs.
Here’s a checklist of what to review, adjust, and consider each year before your home insurance renewal to make sure you’re getting the right coverage at the best possible rate.
1. Evaluate Your Coverage Limits
- Review Dwelling Coverage: This covers the cost to rebuild your home if it’s damaged or destroyed. The cost of building materials and labor often rises, so your policy’s coverage limit should reflect the current replacement cost of your home, not just its market value.
- Consider Increased Personal Property Limits: Over time, you may acquire new valuables—electronics, appliances, or furniture—that raise the total value of your belongings. Update your insurance coverage to ensure all new possessions are protected.
2. Account for Home Renovations or Improvements
- Assess Major Upgrades: If you’ve remodeled your kitchen, built a deck, or added square footage, it’s crucial to update your policy. Upgrades like new flooring, custom cabinets, or major electrical work can increase your home’s value, and your coverage should reflect these improvements.
- Factor in Security or Safety Installations: New security systems, fire alarms, or storm shutters can reduce risk, which may qualify you for a discount. Letting your insurer know about these upgrades can potentially lower your premium.
3. Review Personal Liability Coverage
- Assess Your Coverage Needs: Personal liability coverage protects you if someone is injured on your property. With rising medical and legal costs, you may want to increase this limit. This is especially important if you have higher liability risks, such as a swimming pool, trampoline, or pets.
- Consider an Umbrella Policy: For extended liability protection, an umbrella policy can offer additional coverage that kicks in if you exceed your home insurance liability limits. This is beneficial if you host gatherings or have potentially hazardous amenities on your property.
4. Update Inventory of Personal Belongings
- Conduct an Inventory: Review your belongings annually and update the list to include any new or high-value items, like art, jewelry, or electronics.
- Consider Adding Riders: High-value items may require additional protection through riders (or “floaters”) if their value exceeds your policy limits. This is especially important for items like jewelry, collectibles, and heirlooms.
5. Reevaluate Deductible and Premium Options
- Review Your Financial Situation: If your financial situation has changed, consider adjusting your deductible. A higher deductible can reduce your premium, but it means paying more out of pocket if you make a claim.
- Balance Risk with Savings: If you haven’t filed a claim recently and have a healthy savings cushion, raising your deductible may lead to significant premium savings. Conversely, if you prefer lower out-of-pocket expenses, a lower deductible might be the better choice.
6. Check for New Discounts
- Explore Additional Discounts: Insurance companies regularly update discounts, so it’s worth checking for any new options. Common discounts include bundling home and auto policies, remaining claim-free, or installing safety systems.
- Ask About Loyalty Discounts: Some insurers reward customer loyalty with lower rates. Before renewing, inquire if there’s a discount for long-term policyholders.
7. Adjust for Lifestyle Changes
- New Residents or Property Usage: If family members have moved in or you’re renting out part of your home, let your insurer know. These changes can impact coverage needs and may require adjustments to liability coverage or property protection.
- Home-Based Businesses: If you’ve started working from home or running a business out of your property, consider adding coverage for business-related equipment or liability. Home insurance typically doesn’t cover business assets or injuries related to business activities.
8. Revisit Flood and Disaster Coverage
- Reevaluate Flood Risk: Flood risks change over time due to factors like climate and local developments. If you’re in a flood-prone area, consider adding flood insurance if it’s not included in your standard policy.
- Check Disaster Coverage Needs: Areas affected by wildfires, hurricanes, or earthquakes may need specialized coverage. Double-check that you’re covered for regional risks or add a separate policy if necessary.
9. Review Market Trends and Policy Competitiveness
- Compare Rates with Other Providers: Insurance rates fluctuate, and different companies may offer better rates or policy benefits. Take the time to shop around and compare quotes to ensure you’re not overpaying.
- Explore Policy Bundling Options: Bundling home insurance with auto, life, or other policies can lead to a sizable discount. Review your existing policies to see if you could save by switching providers or bundling.
10. Consider Alternative Coverage Options
- Extended Replacement Cost Coverage: This coverage goes beyond your dwelling limit to cover unexpected increases in repair costs. If you’re in an area with rising construction costs, it might be worth adding.
- Ordinance or Law Coverage: This covers the cost to bring your home up to current building codes after a covered loss. If your home is older, this can be valuable coverage to consider.
Final Thoughts
Annual home insurance renewals are an opportunity to ensure your policy remains aligned with your needs, maximizing coverage and minimizing costs. By carefully reviewing and updating your policy each year, you can stay protected against unexpected events and avoid gaps in coverage. Preparing for renewal with these steps ensures your home insurance continues to provide reliable security for you and your home.
