Updating Your Homeowners Insurance

Property values may be falling, but for many people their homes are still their biggest asset. To protect this investment, homeowners should regularly review their insurance to make sure they have enough coverage to rebuild their home and replace their personal possessions in case of disaster.

There are numerous reasons to consider updating your homeowner policy:

1. The cost of rebuilding is going up. It’s important to understand that the
market value of your home, which includes the land, and its replacement
value, are very different.

2. You’ve remodeled. Something as simple as a bathroom remodel can impact your
home value and should be discussed with your agent.


3. You’ve installed a sprinkler system. Many insurers offer credits for
alarms, sprinklers and other safety devices; be sure to ask.


4. You’ve got more stuff. We tend to buy enough stuff to fill all of our
available space. If you’ve bought a new dining set or acquired a lot of
things you didn’t know you needed for a new baby, make sure you have enough
homeowners insurance to replace it. Conversely, if you’ve divorced or your
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 percent to 70 percent of the
amount of insurance you have on the structure of your home, according to
the Insurance Information Institute. So if you have $100,000 worth of
coverage on the structure of your home, you would be covered for $50,000 to
$70,000 of the contents of your home, depending on the specific policy. The
best way to determine if this is enough coverage is to conduct a home
inventory.

5. You’ve got expensive stuff. Your insurance may only pay a certain amount
for individual items, such as jewelry or works of art. If you have an
extensive collection, you may need additional coverage for these items.

6. If you run a business from your home, you may have limited or no coverage
under your homeowners policy.


7. You live in a flood or earthquake zone. Standard homeowners insurance
provides coverage for disasters such as fire, lightning and hurricanes. It
does not include coverage for flood (including flooding from a hurricane)
and earthquake. Flood insurance is available through the federal
government, but can also be purchased from the same agent or company
representative who provides your homeowners or renters insurance.

8. If you change carriers you may save money by combining your home, auto
and other coverage with the same carrier.


9. You want to protect your assets. Homeowners insurance does not just protect
the structure and contents of your home, it also covers you against
lawsuits for bodily injury or property damage if someone gets injured at
your home. Most standard home and renters insurance policies will generally
provide at least $100,000 of liability coverage.

10. Standard homeowners 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.