The last thing a person wants is to be confronted with one headache and find out it is worse than originally believed. This is what can happen if there is damage done to your house or automobile and you find out you don’t have the right coverage. To avoid these potential problems, it is a good idea to make it a habit to reevaluate the insurance you carry on your home and autos every New Year. Just like you change batteries in smoke detectors every daylight savings time change, evaluate insurance policies every January 1.
Things to Check
The first document to look at is the declaration pages. These documents provide the important details of the actual insurance policies, such as your name and where you live. The next thing to examine is the coverage limits. Compare them to the previous year and ensure that any changes to your coverage were because you requested them or natural insurance price increases. Your auto rates could fluctuate if you’ve been in an accident or had a ticket since the previous year, or your insurance company may have changed your rates. You want to ensure everything is adequate and accurate.
Also keep in mind that there may be more drivers in your household, or the drivers may have moved out. You won’t want to pay for someone who no longer is part of your household, and you don’t want to have a driver who is not covered. You may also qualify for a good driver or a good student discount and discover you forgot to provide that information to the insurance company.
Again, you need to ensure that the address is correct. When determining if you have an appropriate amount of insurance, begin with the value of the home itself, don’t include the land. The land remains—the structure is what must be repaired or replaced. Don’t just use the appraised value to determine coverage. Appraised value will include the land. Next, determine how much it will cost to cover your possessions.
Then, look in your policy for what is not covered. Many people discover what their insurance policy doesn’t cover when they file a claim. Homeowners may think their home would be covered if their sewer backed up, but many policies won’t cover something like this unless the homeowner requests that it is added—often for $200 a year or less.
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