Review Your Homeowners Insurance After These 3 Events
Do you own your own home? If so, you undoubtedly have homeowners insurance. It's a basic, but important, protection tool that limits your exposure to risk. Your homeowners insurance provides financial support in the event of unpredictable emergencies, like fire, weather damage, or even theft. Most lenders require you to have home insurance before you close on the purchase of a new home.
In a perfect world, you'd review your homeowners policy each year along with your investments, taxes, and other financial documents. However, it's easy to forget to check your coverage, especially if you rarely use the insurance, which is the case for most people. Even if you don't review your coverage regularly, there are times when a review is important. Below are three such times. If you've experienced any of these recently, sit down and take a fresh look at your homeowners policy.
Home improvement. Half the fun of owning a home is updating it to meet your needs and goals. Maybe you want to finish your basement, remodel a kitchen, or even add on a bedroom. Often, updating your own home is much easier and more affordable than buying a new one. Your update could have a big impact on your coverage, though. First, your update likely increased the value of your home. You'll want to make sure your insurance accurately reflects your home's true value.
Also, it's possible that the update reduced your home's risk. For example, maybe your newly finished basement is now less vulnerable to water damage. Maybe you had to replace the old wiring during your kitchen remodel. Maybe you added more support to your home's structure. These improvements could reduce your premiums, so it's worthwhile to check your policy.
Major life change. The number of people in a home always impacts the amount of possessions in a home. If you recently got married or had a child, you probably have more furniture, clothing, and other items in the house. All of those things need to be covered. Similarly, if you got divorced or had a child leave the nest, you may not need as much coverage anymore. Children can also increase your potential liability, especially if you have things like trampolines, swimming pool, or a playset. You may need coverage for any injuries that could occur, especially if your child has friends over to play.
Paid-off mortgage. When you buy your home, your lender may dictate much of the terms in your coverage. They want to be protected should anything happen to the property. However, once you pay off your mortgage, you get to decide how much and what kind of coverage you want. This is a good time to review your insurance and see whether the lender required you to carry more protection than you actually need.
Ready to review your coverage? Talk to your insurance agent. You also may want to consult with other agents to shop around and seek second opinions.