4 Reasons Why You Should Review Your Home and Auto Insurance Every Year
Insurance is something that most people purchase and forget about—until they need it. But letting your policies sit untouched for years could lead to gaps in coverage, paying too much for outdated policies, or missing out on new benefits. This is why it’s crucial to review your home and auto insurance annually. Here’s what to look for, how to make sure your coverage still fits your needs, and tips for evaluating an insurance company, even if you’ve never heard of them before.
The Importance of an Annual Insurance Review
Each year, your personal circumstances, financial situation, and even the insurance market can change. Reviewing your policies regularly ensures that your coverage remains adequate and up-to-date. It helps you avoid overpaying for unnecessary coverage or, worse, finding yourself underinsured when disaster strikes.
4 Common Reasons Why An Annual Review Is Essential
- Life Changes: Major life events—like getting married, having children, buying a new home, or adding a car—can significantly affect your insurance needs. If your circumstances have changed, your coverage might need to change as well.
- Policy Changes: Insurance companies periodically update their policies, offering new coverage options or adjusting premiums. An annual review gives you the opportunity to take advantage of better deals or more comprehensive protection.
- Market Changes: Competition within the insurance market can lead to better rates or incentives, which you can benefit from by regularly comparing quotes from different insurers.
- Avoiding Coverage Gaps: If you’ve made improvements to your home, such as adding a new roof or building an extension, or if you’ve purchased a new vehicle, your current policy may no longer provide adequate coverage.
What to Look for During Your Review
When reviewing your home and auto insurance policies, here are the main areas to focus on:
Coverage Limits
- Home Insurance: Verify that your dwelling coverage limits are still sufficient to rebuild your home in the event of a total loss. Construction costs can rise over time, so what was enough a few years ago may not cover today’s expenses. Don’t forget to review personal property coverage—especially if you’ve acquired high-value items like jewelry, electronics, or art that need to be insured.
- Auto Insurance: Ensure your liability coverage meets your current needs. Liability limits should be high enough to protect you in case of a serious accident. Check for any changes to your personal situation, like a teenage driver in the family, which might require additional coverage.
Deductibles
Review your deductibles and consider whether they still make sense for your financial situation. Opting for a higher deductible can lower your premiums but also means more out-of-pocket costs in the event of a claim. Strike a balance that fits your current budget and risk tolerance.
Discounts
Are you taking advantage of all available discounts? Some insurers offer discounts for bundling home and auto insurance, installing safety devices like alarms or fire detectors, or maintaining a good driving record. Check with your insurance company to see if you’re eligible for any new savings.
Policy Exclusions
Make sure you fully understand what your policy doesn’t cover. For example, many home insurance policies exclude flood or earthquake damage, requiring separate coverage. Be aware of any exclusions that could leave you vulnerable.
New Coverage Options
Insurance companies frequently introduce new coverage options, such as rideshare insurance for Uber and Lyft drivers or cyber liability insurance for homeowners. Review your insurer’s current offerings to see if there are additional protections you need.
Compare Rates
Even if you’re satisfied with your current insurance company, it’s always a good idea to shop around and compare rates. A little time spent getting quotes could lead to significant savings, especially if you’ve been with the same company for years.
How to Evaluate an Insurance Company (Even If You’ve Never Heard of Them)
When shopping around for insurance, you may come across companies you’ve never heard of. This can be especially common if you’re using online aggregators to get quotes. While lesser-known companies aren’t necessarily a bad choice, it’s important to evaluate them carefully to ensure they’re reputable and reliable.
Check Financial Stability
The financial health of an insurance company is crucial because you want to be confident, they can pay out claims when needed. Look up the company’s financial strength ratings through agencies like AM Best, Moody’s, or Standard & Poor’s. These ratings assess the insurer’s ability to meet its financial obligations.
Look at Customer Reviews
Online reviews can give you a snapshot of how customers feel about the company. Check platforms like the Better Business Bureau (BBB), Trustpilot, and Google Reviews. Pay attention to comments about the claims process, customer service, and policy management.
Licensing and Regulatory Standing
Confirm that the insurance company is licensed to operate in your state. This can usually be verified through your state’s Department of Insurance. The department can also provide information on the company’s complaint history, giving you an idea of how they handle customer issues.
Ask for Referrals
Don’t hesitate to ask friends, family, or colleagues if they’ve heard of or had experience with the company. Personal recommendations can provide valuable insight, especially when evaluating lesser-known companies.
Evaluate Customer Service
The quality of customer service can make a big difference in your experience with an insurance company. Test their responsiveness by calling their customer service line with questions. How quickly and effectively they respond can be a good indicator of what you can expect when filing a claim.
Review the Claims Process
Research how easy it is to file a claim and what the average turnaround time is for processing and paying claims. The last thing you want is to face roadblocks when you need to use your insurance. Some companies may offer 24/7 support or online claim filing, which could be important factors for you.
When to Consider Switching Insurance Providers
After reviewing your insurance, you may find that your current policies are either too expensive or no longer fit your needs. This might be a good time to consider switching providers. If you do decide to switch, be sure to avoid any gaps in coverage by ensuring the new policy starts as soon as the old one ends.
Here Are A Few Reasons To Consider Switching
- Your current provider’s rates have increased significantly without justification.
- Another company offers similar coverage for a lower price.
- You’ve had poor customer service or claim experiences with your current insurer.
Conclusion
Reviewing your home and auto insurance annually can help ensure that you’re adequately protected, paying a fair price, and taking advantage of new discounts or coverage options. During this review, make sure to carefully evaluate your coverage limits, deductibles, and any exclusions. If you come across a new insurance company you’ve never heard of, take the time to research their financial strength, customer reviews, and service quality to ensure they’re a reliable option.
With just a little effort each year, you can maintain peace of mind knowing that your insurance will protect you when you need it most.
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