In: Finance25 Aug 2013
With the passing of every year, many of us go through significant changes and your home insurance policy can be affected by some of these. If you’re like most people, you’ve never actually reviewed it other than when you first made your purchase. This can be a costly mistake that affects both the value and quality of your coverage. So many things can change your insurance coverage risk. Below are a few of the more common items that come up regarding changes that could impact your insurance.
When a homeowner adds a rental unit inside their household, the property value will almost certainly rise. If the home renovations are more than a specific dollar amount, the majority of home insurance companies require to be informed within a specified time-frame. In a case where some damages or loss is incurred and you failed to inform your insurance company, you could find yourself with insufficient insurance coverage. The new replacement cost of your home can be easily determined with the assistance of your insurance broker.
Your home insurance policy likely requires you to advise your insurance agent if you are going to make any significant changes to the building, or to how it’s used. When you purchased your home insurance, you indicated that this for a single family dwelling on the policy. If it becomes a two family dwelling, and if you neglect to advise your insurance agent, your policy could be invalid.
The risks of damage or loss will likely go up if you have tenants, and your insurance company will look at it this way. If your tenant, or a guest of your tenant, trips on a ladder in your backyard, or slips on an icy step, you can be sued for their injuries. Ramping up your coverage could be a clever move. Paying a little more now can reduce some worry that you may have as a homeowner, and could save you a lot of money in an unfortunate situation.
Every year, you should be looking over your insurance policy in detail. Renovations in the basement may have been completed, or a new room added, for example. There are many homes out there undergoing renovations. It’s so common that it seems expected of folks.
The insurance company needs to be informed when these projects begin. Take the time to learn what is important in terms of your home insurance. This is not one of the things in your financial life that you want to take for granted. You should have comprehensive form insurance, and be covered at current construction prices to rebuild your home, and the costs to replace the contents and repair damaged structures. Don’t be surprised that prices go up. These costs must be determined as you figure out the replacement value of your home. Your insurance advisor will assist you in this matter.
You need clarity about the amount of insurance being purchased. Every year, re-calculate the projected costs to rebuild your home. Don’t underestimate the significance of your home insurance on your overall financial health. It’s just plain sensible to reduce your risks this way. You want to ensure that in the unfortunate event that disaster strikes, your insurance will be there and the coverage will be enough.
Change almost always occurs and some of it can impact your home insurance coverage. It would be wise to look into what coverage you have right now, so you can rest assured that you are protected in case of significant loss or damages.