How well do you know what’s covered and what isn’t covered under your homeowners’ insurance policy? We find that many people who buy insurance online without using a Maryland insurance agent tend to have a poor understanding of their coverage. Meanwhile, realizing you are not covered should happen before a disaster strikers—not after. In this recent case, for example, the homeowner ended up paying close to 1/3 of flood damage expenses out of pocket due to gaps in coverage. To avoid similar situations, it’s best to review your homeowners’ policy on an annual basis and check for changes in the following factors.
The Cost of Rebuilding
A big factor in determining your home insurance premium is the cost of rebuilding your home from scratch in an event of a total loss. It’s possible that you’ve added to your home or improved it since the last time this cost was estimated. If your policy wasn’t adjusted to reflect that, you will not get reimbursed for the home improvements you’ve completed, which means you won’t be able to build a home of equal value. Remember to revisit your policy after every major home renovation project including but not limited to:
- Home additions
- Kitchen, bathroom or basement remodeling
- Deck, porch, sunroom or patio addition or improvement
- New outdoor structures: gazebo, shed, garage, pool, etc.
Personal Property Coverage
You probably have a home inventory that was created when you purchased your homeowners’ insurance policy. But a lot has changed since then: people may have moved in and out, some items got sold or gifted, or maybe you received expensive gifts. Instead of a $500 TV you may now have a $1500 home theater, which triples the replacement cost. Create a new home inventory and compare the two to check whether your current contents coverage is sufficient. If you significantly increased your assets in the past few years, it may make sense to talk to your Maryland home insurance agent about raising the limit for personal property coverage.
Besides bundling several policies under the same insurance company, there are many other credits and discounts available to homeowners. You may not have qualified for them when you first purchased your insurance, but it’s possible that your circumstances have changed. If any of the following sound familiar, talk to your insurance agent to find out whether your insurance provider offers these discounts:
- Your neighborhood was converted into a gated community or is now a part of the Homeowners’ Association.
- You have installed a high-tech fire alarm or home security system.
- You have upgraded your heating, plumbing or electrical systems with safer, more energy-efficient appliances.
- You have installed impact-resistant roofing.
- You have not filed any claims for the entire period your home is insured.
- Your credit score has improved.
- Your household is now non-smoking.
- You have recently retired and paid off your mortgage.
In addition to the above discounts, insurance underwriters may also change their rating system to improve its accuracy and efficiency. Even if you didn’t do any of the above, this single algorithmic change may put you in a different bracket that allows for a lower rate. Sometimes, requesting a new quote from the same insurance company is worth the hassle.
If you have recently started a home-based business, keep in mind that your homeowners’ insurance doesn’t cover business liability and equipment. You will need to obtain additional coverage in order to protect your business assets.
Contact us today if you need help understanding your homeowners’ insurance coverage or reviewing your policy.