You may barely glance at your homeowner’s insurance renewal each year, but that’s a mistake. Changes in your home or life may mean you need a boost in coverage or that you’re eligible for fresh discounts. Let’s review before you renew.
Read your homeowner’s insurance policy renewal
You should receive the policy renewal about 45 days prior to the renewal date. Homeowner’s insurance covers the structure of your home and personal property and also provides liability protection should a guest be injured on your property. The land your home sits on is excluded.
The policy will list the out-of-pocket deductible amount you must pay for a property damage claim, often a percentage of the value of the home, such as one percent. Review these coverage amounts to determine if they are still adequate. Here are situations where you should raise the amount of coverage.
Raising your coverage amounts
- Adjusting for inflation each year is important. Even a modest one or two percent annual inflation rate steadily ratchets up the replacement cost if you have a claim.
- Replacement costs may also rise after major disasters, as builders flock to these areas during recovery efforts and labor and materials shortages drive up costs. Make sure your annual renewal amount is sufficient to take rising building costs into account.
- If you remodel, update a kitchen or bath or add a room, your home value increases and you need more coverage.
- Adding a pool increases not only property to protect, but your liability risk. Carry more than just a basic liability cap of $100,000. Insurance experts recommend bumping it to $300,000 or more.
- Trampolines are so problematic for insurers that buying one could result in your insurance company excluding any claims arising from it or even canceling your policy. It is best to find out how your insurer treats trampolines before buying one.
- When you add new furnishings, increase your coverage for personal possessions. That new home audio-visual equipment adds cost if you have a major casualty loss.
- Depending on its breed, getting a dog may increase your premiums. Talk to your insurance agent about your dog, and never hide the fact that you have a breed that may be considered dangerous. If you do, coverage will be denied if the dog bites someone and your policy may be canceled.
Ways to save on premiums
Premiums don’t always have to rise. Talk to your insurance agent about a discount in these circumstances.
- You could be eligible for a discount if you’ve added or updated smoke or carbon monoxide detectors, security systems or a fire extinguisher. If a fire department has been built or a fire hydrant installed nearby, those mean savings, too. There’s even a discount for having deadbolt locks.
- If you’ve stopped smoking or retired, you may be eligible for savings.
- Many insurance companies offer discounts for bundling your auto and homeowner’s insurance together. They will also offer discounts to policyholders who keep their insurance business with the company for many years. If you rarely, if ever have a claim, that should get you a discount.
If you have plenty of liquid savings, consider raising your deductible to lower your premium. You’ll pay more out of pocket if you have a claim, but you can set aside the monthly premium savings to create the extra reserve amount needed to cover a loss.