While I live for insurance and reading policies, I can pretty safely say that you probably don’t feel the same way. Well, you’re not alone in that regard, as most people don’t want to spend that much time on their insurance policies. In fact, once someone has purchased their insurance, they tend to just let it automatically renew each year without making any adjustments. Unfortunately, this really isn’t the best way to deal with your home insurance, as you will either end up underinsured or grossly over insured. In either event, the outcome isn’t positive.
One of the most common problems with insurance renewals is the automatic increase of insured values. Many insurance companies will send you a renewal a few months before your current policy expires and include an increase of a certain percentage. This usually represents a standard inflationary adjustment. While this may have its benefits, it can also have the undesired effect of significantly raising your values and premium over time. The process probably helps a lot of homeowners who don’t go through the process of properly reviewing and updating their insured values each year. However, if the increase happens at a too-rapid pace, you’ll end up paying for a lot more insurance than you actually need. Therefore, you do need to review your renewal policy each year before it is finalized.
During the course of the year, if you’ve made any significant changes to your home, you need to make sure the values are properly reflected in your policy. Of course, it’s a better idea to do this as soon as the changes were implemented. If, however, you have forgotten to update your insurance company, renewal is a good time to do a thorough review of your property. Instead of relying on an automatic insurance renewal, take the annual renewal of your policy as an opportunity to give your home the once-over it deserves.
Even if nothing has changed and the renewal policy sent to you seems in order, you still owe it to yourself to see if your current policy and insurance company are the best option for you. The insurance marketplace is an ever-evolving and dynamic environment. Insurance companies sometimes change their appetite for risk very quickly and an insurer who was previously a big supporter of your business may find itself in the position of avoiding your home insurance policy. Without a refusal to renew your policy, one of the ways this manifests itself is in the premium being charged. Therefore, you need to do a review of the insurance marketplace to see if you’re still with the best option when it comes to which insurance company provides your coverage. Sometimes these changes in focus have nothing to do with anything specific to your policy, but rather, a change in business focus that then renders your business less desirable. Don’t take it personally — just move on.
While it can be very tempting to accept those automatic renewals that come in the mail each year, you do need to do a review of your policy before accepting the offer.