By Allison Bisbey Colter
Special to Relocation.com
Your home is probably your biggest investment, so you need to protect it. A bit part of that is making sure your coverage reflects any changes in your life. Homeowners should regularly review their insurance to make sure that enough coverage.
Here are some reasons you might need to update your policy.
1. Rebuilding costs are rising. It's important to understand that the market value of your home, which includes the land, and its replacement value, aren't the same. "The value of real estate is not what you're replacing," says State Farm spokesman Dick Leudke. "You don't want to overinsure." On the other hand, the cost of rebuilding is always likely to rise, so it's a good idea to review your coverage every few years.
2. You've installed a sprinkler system. Many insurers offer credits for alarms, sprinklers and other safety devices, be sure to ask.
3. You've done a remodel. "Something as simple as a bathroom remodel can impact your home value and should be discussed with your agent," says Madelyn H. Flannagan, vice president for education and research at the Independent Insurance Agents and Brokers of America, Inc., a trade association.
4. You've got more stuff. We tend to buy enough stuff to fill all of our available space. For example, if you've acquired a lot of things you didn't know you needed for a new baby, make sure you have enough insurance to replace it should you need to. On the other hand, if you've divorced or the kids have moved out and have their own coverage, you may not need as much coverage. Most homeowners insurance policies provide coverage for your personal possessions for approximately 50% to 70% of the amount of insurance you have on the structure of your home, according to the Insurance Information Institute, a trade group. So if you have $200,000 worth of coverage on the structure of your home, you would be covered for $100,000 to $140,000 worth of the contents of your home, depending on the specific policy. Doing a home inventory is a good idea to check this.
5. You started working from home. If you're running a business from home, you may have limited or no coverage under your homeowner's policy.
6. You've got pricey stuff. Your insurance may only pay a certain amount for individual item, such as jewelry or works of art. If you have an extensive collection, you may need additional coverage for these items.
7. You're changing carriers. You can often save money by combining your home, auto and other coverage with the same carrier.
8. You want to protect your liability. Homeowners does not just protect the structure and contents of your home -- it also covers you against lawsuits for bodily injury or property damage that you or your family members cause to other people. Most standard home and renters insurance policies will generally provide at least $100,000 of liability coverage. But additional protection is available and everyone should consider getting enough insurance to protect all of their assets.
9. You live in an older home. Standard homeowner's polices won't cover you for damage from sewer or drain back-up or other mishaps that you might experience in an older home, but most insurers offer it as an add-on. Check with your insurer about what other types of insurance coverage you might need if you live in an older home.
Allison Bisbey Colter is a freelance writer in New Jersey whose work has appeared in The Wall Street Journal and American Banker. She is a former editor at TheStreet.com and a former reporter for Dow Jones Newswires.