Homeowner Insurance Assumptions
What you think you know…
One of the main purposes of homeowner insurance is to protect your house’s structure and its contents in case of a catastrophe. This protection would allow the homeowner to re-build the home and replace furniture, mechanical systems and possessions should they be destroyed or badly damaged.
Many homeowners assume that the amount of coverage they carry should be roughly equivalent to the home’s sale value. This assumption confuses many persons who see their homeowner’s premium rise slightly from year to year when they may have been told that the home’s sale value has been declining. If you remember that homeowner insurance covers rebuilding costs - not sale value - it makes some sense that the rise in premium is intended to cover the annual increase in the cost of building materials and labor, etc. Sale value of the home also includes land or a building lot which is not a consideration in homeowner insurance.
With these facts in mind, how does the homeowner keep their coverage up to date? Many of us simply assume that their insurance agents and companies know what they need and provide it automatically. That may have been true when you first purchased your policy. Insurance companies use independent appraisal firms in order to gauge the costs to rebuild a given home when the policy is purchased, but as time goes on those costs can change, particularly if you have made changes or improvements to your home.
The best way to make sure the amount of your coverage is appropriate is to speak regularly to your agent to let them know if you’ve made improvements or additions, added alarm systems (which can reduce your premiums), installed a pool - which might increase your liability exposure, added an outbuilding, had an upgrade to your fire district and so forth. The agent would also like to know if you’ve acquired antiques, jewelry or other special valuables which should be covered under your policy or under a separate rider for that purpose.
Tip: Most insurance companies offer significant discounts for bundling your homeowner policy with your auto policy and all clients are advised to consider this convenient way of saving money on both policies.
Agents like Bryant Asset Protection offer a variety of forms of homeowner policies which provide differing levels of coverage explained more fully here on our website. Because your personal circumstances may have changed over the years or even more recently, you may want to consider a different form of homeowner insurance or even a personal umbrella policy for even greater protection. We love to talk to our clients about their policies, so contact us and we’ll offer you some great ideas to keep you safe and up to date.