Top 4 Tips to Get the Best Home Insurance Review of Coverage

In today’s rapidly changing world, staying ahead of the curve and ensuring that our insurance coverage aligns with our evolving needs is essential. Many homeowners tend to overlook the importance of regularly reviewing their home insurance policies, which can leave them vulnerable to unexpected financial hardships.

Just as life evolves, insurance policies and rates also change over time. By staying up-to-date with your home insurance policy, you can take advantage of potential cost savings or enhanced coverage options. Insurance providers regularly update their offerings to align with homeowners’ evolving needs and provide more comprehensive coverage.

By reviewing your policy, you can ensure that you are aware of any new coverages or discounts that you may qualify for, allowing you to maximize your protection while potentially reducing your premium costs.

1. Adapting to Life Changes

Life is full of unexpected twists and turns, and as our circumstances change, our insurance needs change with them. Whether you’ve experienced major life events such as getting married, starting your own business, or acquiring valuable assets, ensuring that your insurance coverage adequately reflects these changes is crucial. Consider the following factors when evaluating your coverage:

a. Family Changes

If you’ve recently gotten married or divorced, you may need to alter the names of those insured on the Cover Page of your home policy. This one is important as in the event of a claim or loss, the settlements will be made out to whoever is listed as a named insured.

b. Changes in Occupancy Status

Has the occupancy of your insured location changed since your last policy review? Whether your property is vacant, rented, occupied by a family member, or used as an Airbnb, it’s important to inform your insurance provider to ensure you have the appropriate coverage. If the occupancy status of a property is incorrect, it can lead to denial of claims, leaving you in a big financial pinch.

c. Home-Based Business

If you operate a home-based business or offer consulting services from your property, reviewing your policy and ensuring that you have the necessary coverage is essential. Your advisor will ask you a series of questions to determine if your policy needs to include “business permission” to avoid any interruptions in your coverage. This can often lead you to discover that your personal property coverage will not cover any damage or loss associated with or stemming from your business. For example, your business equipment, such as tools you use, products you sell on Etsy, the computer you use for IT consulting IT, or the items you use for running a daycare may have limited or no coverage at all, depending on your insurer.

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2. Your Home and Assets Coverage Gaps

One of the primary reasons for reviewing your home insurance policy is to identify any gaps or deficiencies in your coverage. It’s crucial to ensure that you have adequate protection for your home, personal belongings, and other important assets. A thorough evaluation of your policy will help you identify areas where you may be underinsured or lacking coverage altogether. By addressing these gaps, you can safeguard your financial well-being and protect yourself from potential financial hardships in the event of an unforeseen incident.

Consider the following areas when assessing your coverage:

a. Water Protection: Sewer Back-up and Flood Coverage

Water damage can be a significant threat to your home. Review your policy to ensure that you have adequate coverage for sewer backup and flood damage. For example, not every policy will have full water protection. Having reduced coverage limits, such as $30,000 or $50,000, dramatically affects your claim when the time comes.

b. Home Systems Protection: Mechanical or Electrical Failure

Home systems, such as your HVAC system, electrical wiring, or plumbing, can be costly to repair or replace if a mechanical or electrical failure occurs. Some insurers have implemented an ‘age’ stipulation regarding the coverage for the home systems. Ask your advisor if the age of your AC or furnace, for example, will affect how your insurers choose to pay out claims. For example, it will affect whether the insurer pays to replace the unit or offers a reduced settlement based on the actual cash value (ACV – value of unit minus depreciation).

c. Increased Limits for Valuable Items: Jewelry, Watches, or Furs

If you own high-value items such as jewelry, watches, or furs, check if your policy provides increased limits for these items. If not, consider adding additional coverage to protect your valuable possessions adequately.

d. Scheduled Coverage for Property: Coverage Limits

If you have jewellery or special items scheduled as a rider on your policy, review the value you have insured it. For example, the value of gold has changed significantly in the last 10 years. If the value of your engagement ring is relatively old, you may not get the full current value of your ring compensated in the event of the claim, as your insurance will only pay up to the amount listed on the Cover Page.

It’s not just jewellery; boats are also increasingly undervalued when involved in a claim. Often, what happens is the client sets a coverage limit at the time of purchase but then never reviews it again. The cost of a boat 10 years ago is a lot different from today, but again, your insurance will only pay up to the limit set on the policy in the event of a covered claim. Check the price of your boat, seadoo, ATV, dirt bike, etc., in today’s market and make a note to review your coverage limit at your next review.

3. Common Mistakes to Avoid When Reviewing Home Insurance

Don’t Wait Until After Your Renewal: Many policy changes can’t be made after your policy has already been renewed. If you’re interested in making changes or potentially moving your insurance to a new provider, consult your broker well before your policy renews so they have ample time to check the prices and contact underwriters to have coverage changed or approved. In fact, do it now and contact your office today!

Rebuild Value: A lot has changed in the past year, including the cost of everything. Check the property rebuild limit on your policy and ask your broker the last time you updated it. Remember the cost of wood increasing a couple of years back? An evaluation of your home rebuild value may still be needed to avoid insufficient coverage.

Away from Your Home During Winter/Spring: If you are away from your home during the normal heating/melting season, there are typically rules set by your insurer to abide by for your coverage to remain in force. They typically give you a list of options to choose from, and it varies among insurers, so be sure to ask your advisor if you plan to be away from home during the winter or spring season so your water protection remains active. For example, one requirement may include having a responsible individual check your house daily for signs of water damage.

Roof, Electrical, Furnace & Plumbing: Some companies offer better coverage or premium rates if the house has had updates. But even more important is the insurer can limit your roof coverage depending on the year the shingles were last replaced, so check to see when you last updated your policy. Nothing is worse than heading into a wind claim and learning how much depreciation has accumulated for your shingle value. 

4. How to Prepare for an Effective Home Insurance Policy Review

Conducting a comprehensive review of your home insurance policy doesn’t have to be a daunting task. By following these steps, you can ensure that your review is thorough and effective:

1. Gather all relevant documents: Collect your current policy documents, including any recent updates or endorsements. But if you can’t find them, that’s okay; your advisor will have them on file for you.
2. Make notes about your questions before the review. Write them down on the policy itself if it helps, such as question marks (?)  next to the things you don’t know or stars (*) next to the things you need to change.
3. Ask yourself if any of the following has changed for your home since your last good in-depth review (this is not a complete list).
   • Have you added a hot tub or swimming pool?
   • Have you added a wood-burning stove or fireplace insert?
   • Have you added a burglary alarm that a 3rd party agency monitors?
   • Mortgage or loss payee change or removal?
4. Review policy exclusions and limitations: Familiarize yourself with the exclusions and limitations of your policy.
5. The last step is simple but probably the most important: Set aside time to discuss your insurance. Plan anywhere from 45 minutes to an hour to allow ample discussion so you don’t feel rushed to make decisions.

Whew! That’s a lot of information!

Reviewing your home insurance policy is an investment in your financial well-being and peace of mind. Knowing that you have the right coverage tailored to your current needs can alleviate stress and allow you to focus on other aspects of your life. By taking the time to review your policy, you can ensure that you are adequately protected and prepared for any unforeseen circumstances that may arise. Regularly evaluating your coverage, adapting it to your evolving needs, and addressing any gaps can ensure that your home and assets are adequately protected.

Don’t wait until it’s too late – start reviewing your home insurance policy today with a Harvard Western Insurance advisor and safeguard your financial future.

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