People often buy home insurance and then forget about it. They pay their policy premium at the same time they pay their mortgage bill and don’t think about it again. Unfortunately, that means they risk being either underinsured or paying for more coverage than they actually need.
You most likely need to review your coverage whenever you have a major change in your situation. Here are several instances when you may need to update your home insurance policy.
1. You just finished a renovation.
The dwelling coverage on your homeowners' policy is based on your home’s replacement cost estimate (i.e., what it costs to rebuild your home), and a major renovation or remodeling project can change that amount. For example, you may want to review your home insurance if you:
- Upgrade your flooring to hardwood.
- Add square footage.
- Finish your basement.
- Improve your cabinets or countertops.
You can use our handy guide to get a rough estimate of how much dwelling coverage you need after a renovation.
2. You brought a new dog home.
Bringing a dog into your home is a great idea, but it can affect your homeowners' insurance. In fact, you can’t assume your insurance company covers your dog at all. Many companies have restricted breed lists that make it difficult for some dog owners to get covered. If your dog is on that list, your insurer may not pay claims relating to dog bites or other damage your dog causes.
Even if your insurance company does cover your dog, it may charge a higher premium. You might also want to update the liability coverage in your homeowners' insurance to make sure you have enough to cover the additional risk.
3. You purchased something expensive.
Big-ticket items like a new television or expensive furniture may mean you need to review how much personal property coverage you have. If you don’t have enough for the new items, you’ll want to increase your coverage limits as soon as possible to protect against loss. Certain high-value items such as jewelry or fine art may require a scheduled personal property endorsement.
4. You added a swimming pool.
A swimming pool may increase the amount of dwelling coverage you need, but it can also mean you need additional liability coverage. Insurance professionals call swimming pools and similar items “attractive nuisances” because they often invite trouble. Other examples of attractive nuisances include:
- Trampolines.
- Tree houses.
- Playground equipment.
- Water features.
You can be held responsible if a child is injured by these or similar items, so you may want higher liability limits if you install one or something similar.
Please note: Kin policies always cover swimming pools under Coverage A. Other insurers may use Coverage B.
5. You installed a security system.
Installing a security system can help you sleep better at night, but you should also call your insurance agent once it’s in. Many home insurance companies offer discounts for home monitoring and security systems, burglar alarms, and deadbolts or smart locks. Some even offer discounts if you live in a gated community.
6. You have a water shut-off device.
A water shut-off device is another good way to earn a homeowners insurance discount. These devices can automatically turn off the water supply to your house when they detect leaks. Water flow sensors can have similar shut-off features that catch irregular flow through your pipes.
7. You bought a new roof.
As your roof ages, it becomes more prone to damage, and that means you’re more likely to file a claim. Your insurance company accounts for this risk by charging a higher premium. But you often see a better rate once you install a roof. You may even see lower homeowners insurance costs if you retrofit your current roof with wind mitigation features like hurricane clips.
8. You started a home business.
Most homeowners policies offer limited coverage for business equipment, so you may have enough insurance if you don’t have a lot of inventory or specialized equipment. That said, liability claims related to a home-based business are almost always excluded. You may be able to fix that with an endorsement, but you might also need a separate commercial insurance policy. Either way, starting a business is a good time to review what is (and can be) covered by your home policy.
9. You rented out your home.
Once you decide to rent your home, you become a landlord and that usually means you need landlord insurance. That’s an altogether different type of policy than your homeowners policy, but it’s important to make the change because your risks changed. For example, your liability risk increases because you can’t control the activity that goes on or guests that go into your home when it isn’t your dwelling.
Landlord insurance also covers the dwelling, other structures, and any personal property you leave on-site to service the home. Your tenant’s property, however, is not covered. The policy also may have coverage for unoccupied spaces and for your rental income.
