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7 Signs You Need To Update Your Home Insurance Policy

Some consumers may assume their home insurance would cover the costs of rebuilding their house after a disaster. An older policy, however, may have coverage limits too low for today’s construction prices. Reviewing your policy limits regularly keeps your coverage up to date and can help you save money. Here are 7 signs you need to update your home insurance. 

1. Rising Housing Costs 

Inflation and supply chain disruptions can greatly increase construction costs. From 2020 to 2022, the price of building materials jumped 33%, and construction services rose 39%. Yet only 30% of insured homeowners have increased their coverage or bought more insurance in the last year.

When looking at how construction costs might affect your policy needs, be sure to consider the following:

  • Does your home have expensive features, such as slate roofing, hardwood floors, or crown molding that may be costly to replace?
  • Does your home contain high-end appliances that can be expensive to replace?
  • Is your home underinsured for a natural disaster? A windstorm or fire could cause serious damage that can be expensive to repair.
  • Are any of your housing materials affected by a supply chain disruption or an increase in demand? For example, in late 2022, the price of framing lumber rose 167%. Industry experts predict certain building materials will continue to be high in 2023.

If you answered yes to any of these questions, it may be time to update your policy to cover rising housing costs.

2. Recent Home Remodel 

A recent home remodel can increase your home replacement cost. For example, adding a new room raises the overall square footage. Likewise, kitchen or bathroom updates that include new finishes, such as quartz countertops, cost more to replace. Increasing your policy limit ensures you have adequate coverage to rebuild your home if needed, including all of the upgrades and additions you had completed.

However, some home upgrades reduce insurance costs. Examples include improving the electrical, plumbing, and heating systems in your home to make it less vulnerable to fire damage or upgrading your roof to new materials to better protect your home from wind damage. If you make these types of renovations to your home, you should reach out to your home insurance company to see if they could offer any discounts for the upgrades.

3. Updated Home Security System  

Like with home upgrades that reduce the risk of damage from fires and storms, insurers reward actions that reduce the risk of claims including if you install an alarm system. Alarm systems lower your risk of break-ins, so installing a monitored security system with surveillance cameras can save you up to 20% with certain policies.

Installing systems that detect and suppress smoke, fire, and water leaks can also make you eligible for discounts. While all insurers require that homes must have smoke detectors, and some require carbon monoxide detectors, home insurance companies may reward homeowners who also install things like sprinkler systems or water flow monitors.

4. Recent Pool Addition  

While you may think of a swimming pool as a relaxing backyard escape, your insurer sees it as a potential liability. If you’ve recently added a pool to your home, you should check that your policy covers your new addition.

Depending on your situation, homeowners insurance may not be sufficient, and some insurers will not issue a policy on a house with a pool. That’s because having a pool brings the risk of potential injury. In these cases, a personal liability umbrella policy, which is extended liability over and above your homeowners insurance, may be beneficial. A personal liability umbrella policy (PLUP) can offer your household protection against large liability claims.

5. Recent Retirement  

Some insurers discount premiums up to 10% for retired homeowners 55 or older. Spending more time at home means the house is less likely to be burglarized and allows the homeowner to detect other hazards such as a ruptured pipe, gas leak, or fire and prevents serious damage.

If you’ve retired since last updating your policy, it may be time to check with your agent to see if you can get a discount.

6. Recent Antique or Collectible Acquisition  

A standard homeowners policy sets limits on what it covers for expensive items, such as jewelry and collectibles. A typical limit for jewelry is $1,500 per policy year. If you’ve recently purchased or inherited valuable items such as jewelry, antiques, or collectibles, you likely need higher coverage limits because a single item could easily cost more than the standard coverage limit of $1,500.

Adding a rider or separate policy, known as scheduled personal property coverage, for each of your valuables would allow you to extend your coverage to each item’s appraised value, giving you adequate protection should anything get damaged or stolen. This type of coverage is usually purchased for the following:

  • Antiques and art
  • Furs and jewelry
  • Coin or stamp collections
  • Firearms
  • Expensive cameras
  • Musical instruments

To add the valuables to your coverage, you’ll need to provide a receipt or professional appraisal to your insurance company.

7. Competitive Rates Elsewhere  

It’s important to shop around every year or so to compare rates and ensure you’re paying a competitive rate for your home insurance. When comparing policies, look at the annual premium, deductibles, and maximum benefits for each type of benefit.

Regularly looking over your policy and comparing rates can either validate that your coverage is still sufficient or help you realize it’s time to make changes. Either way, you can move forward with confidence in your home insurance policy.