Homeowner’s insurance can provide peace of mind, helping you sleep soundly knowing that your property and belongings are protected in the event of a burglary, fire or storm. Unfortunately, if you never update your policy, there’s a chance that you lack sufficient coverage.
Many homeowners do not think of updating their policies, and they don’t realize until filing a claim that their current coverage isn’t enough to pay for damages or replace belongings. Insurance is one of those things that people buy and forget about. However, insurance needs can change tremendously with home improvements and new purchases. If you only have the minimum required coverage you could end up paying thousands of dollars out of pocket.
Here are three smart reasons to look into updating your homeowner’s insurance policy.
1. Remodeling projects.
Home improvement projects, such as a room addition, a bathroom/kitchen remodel and perhaps finishing your basement, can add significant value to your property. But if you don’t notify your insurance provider and update your homeowner’s insurance, your policy may not cover these improvements in the event of a tragedy like a house fire or natural disaster.
Your insurance company retains a record of the square footage of your house and other features, which is how they calculate how much it’ll cost to rebuild your home. You certainly don’t need your insurance company’s permission to make improvements to your home, and there’s no rule that says you have to update your policy. Understand, however, that failing to notify your provider can result in being underinsured. If a fire were to break out and completely destroy your home, your provider will pay to rebuild your home minus any additions or significant upgrades.
2. Electronics, jewelry and other personal belongings.
You don’t have to notify your insurance provider each time to you bring a new item into the home. But if you purchase expensive merchandise over the years, such as high-end electronics or jewelry, updating your policy provides bonus protection.
A typical homeowner’s insurance policy will cover your personal possessions up to 50% of your total coverage, which is typically enough to cover the replacement costs for furniture, clothes and other home items. However, many policies limit the amount of coverage you receive for certain items, such as flatware, guns, jewelry and collectible items. Take a look at your policy to determine your coverage limits and compare this with the value of your recently purchased items (and all the items in your home). Depending of your insurance company, you can possibly add a rider to your policy ensuring the protection of your valuables.
3. Home alarm system.
Some people avoid notifying their insurance company of updates for fear that their rates will increase. This is always a possibility when increasing coverage limits. However, some recent purchases can actually reduce how much you spend on homeowner’s insurance. For example, installing a monitored security system can significantly reduce the risk of a burglary, and if your house catches on fire, an alarm system can typically detect smoke early and notify the fire department before flames destroy your home.