October 19th, 2015
Life is unpredictable. Keeping up with your family's finances and saving the most you can is important, but keeping your homeowners insurance policies up to date is more important still. When life changes unexpectedly, make sure you're saving the most you can without sacrificing safety and peace of mind. We've got the answers regarding when to update your insurance policies right here in one spot:
First off: What is homeowners insurance?
Homeowners insurance, according to the Insurance Information Institute, includes a bundle of different types of insurance policies all packaged together with the intent of protecting all of your assets. This doesn't just consist of your physical house and possessions, but also includes family members' liabilities. Homeowners insurance is meant to protect against disasters ranging from fire, theft or lawsuits, encompassing most injuries and damage that members of your family might cause to other people. Most insurance providers count pets as members of your family.
How much homeowners insurance coverage do I need?
The first step when considering a homeowners insurance policy for your family is the base value - what it would cost to rebuild your home. An excellent tip to getting your home value as accurate as possible is to have a builder walk through your new house and offer his or her professional estimate. Additionally, several base factors go into determining what your home would take to rebuild, according to Farmers Insurance, including:
- Style of home - Is yours a ranch? A colonial?
- Square footage - How large is your home?
- Number of rooms - Ties into square footage and how much space your house physically spans.
- Attached features - Fireplaces, garages and specialty windows all fall under this category. Since they're not part of the main structure of the home, they can be more easily damaged.
- Extra decorative features - Does your home include additional masonry work, fancy veneer, or a special type of roof?
According to MoneyCrashers, there are three primary factors to consider when deciding how much insurance coverage you and your dependents will need:
1. Asset Protection - Essentially, how much you'll have to pay out of pocket if an accident occurs resulting in a lawsuit.
2. Lender Requirements - Typically, the lowest amount of coverage most people get will be the value of your mortgage. If disaster strikes and your home is severely damaged, the mortgage company will recoup the rest of your mortgage balance.
3. Policy Requirements - Depending on your location, some insurance agencies require certain types of additional coverage (such as earthquake), for you to carry their base homeowners insurance plan. Insurance in areas with frequent natural disasters are typically are a bit more expensive.
Certain natural disasters are not typically covered by homeowners insurance, such as floods. Maintenance problems also fall upon the homeowner to take care of separately, and typically out of pocket.
Family changes could affect your policy
Family dynamics change. Pets and people join your throng, and this can cause policy confusion, but the main thing to watch out for is accuracy. Whenever a permanent or semi-permanent family living situation is changed, be sure to update the household names on your policy.
- Name change - If anyone in your household changes his or her name, you'll need to inform your insurance agent immediately, according to American Family Insurance. If you don't, you won't be listed as a covered member on your homeowners insurance policy and other insurance policies.
- Pets and babies - If you have a baby or get a dog, you'll need to update your policy by adding their names to your list of family members. Dogs can be a big liability, and the breed's aggressiveness is a big concern to insurers. Bankrate recently released its list of "11 dogs that could raise your insurance cost." If you take on unrelated roommates or begin renting out rooms of your home, also inform your agent. Renting out rooms requires the renters to provide their own coverage for the rented space. Multiple roommates can be included in the same policy, but all roommates' names must be on the policy.
The key thing to take away is that anyone residing in your home long term should be included in the listing of your policy. Don't worry about how to play the system to get the best deal, as most premiums are altered only a little for additional members - and the coverage they will provide could be very welcome when disaster strikes.
To compare homeowners and renters insurance fast, check out CoverHound.