Each year, renewal notices come in for homeowner's insurance and home contents insurance, most of us just blindly sign the form and send it back to the insurance company, or we glance at it and file it away somewhere. After all, we already know how much the premium is going to be anyway, right? This might be a big financial mistake, and here are four reasons why.
Did You Buy Anything New Since Last Year?
If you bought anything new in the last year, say a new TV or fancy new tablet, then the value of this new purchase is not included in the renewal notice you just sent back to the insurance company. Likewise, if you sold anything of value over the last 12 months, and did not inform the insurance company, then you are paying for insurance you no longer need. Either way, you are not paying the right amount of insurance premium.
Did The Cost Of Your Contents Stay The Same?
Part of homeowner's insurance is having coverage to replace the contents of your home as well. You are insuring your personal property inside the house for the replacement cost of buying the same thing new TODAY. Your homeowner's insurance should cover the cost of labor and materials when building the same house TODAY as well. Now ask yourself a simple question, would the cost of replacing the picture hanging up in your living room be the same today as it was when you bought it? If the answer is that it would cost you more, or a lot more, then tough luck. Most insurance policies only pay out what you said the cost of replacing it would be when you filled the form out years ago!
Did The Value Of Your Home Stay The Same?
Similarly to your home's contents, your home insurance needs have probably changed as well. You should be asking yourself whether or not the value of your home has increased drastically over time? You should be asking yourself this question even if you didn’t do any actual improvements to the house – such as building a deck – that would have increased the value of your home.
Is Your House Safer Today?
Have you done anything to your house over the last couple years that makes your home safer today than previously? For example, did you add an alarm system? If so, then there’s a very good chance your home insurance premium could actually be cheaper now, as home security (and your neighborhood's crime rate) is a major consideration in assessing your annual premium.