Give Your Policy a Check-Up in the New Year

In addition to hitting the gym and losing weight, add an insurance review and check-up to your new year’s resolutions. As with many other items that should be reviewed and updated on a regular basis, your insurance policy is something that needs a periodic look. In many cases, the values on your policy are no longer accurate nor are your liability limits sufficient if your sensitivity to loss has changed. Therefore, it’s not a bad idea to remember to give your policies a quick once-over when the calendar flips to a new year.

The first thing you need to evaluate is the adequacy of your policy’s limit for dwelling coverage. As you know, the dwelling coverage protects you for damage to the house and any attached structures. If you have not reviewed your policy in some time, it will be necessary to give it a good, hard look. Two main factors affect the replacement cost of your home: labor and materials. Both of these items can be impacted by current market conditions such as inflation, supply, and demand. In an era of high demand for construction services and materials, the cost of replacing your home can increase significantly. You need to be aware of these changes to make sure that you have a proper limit on your policy. A nice feature on some policies is known as inflation guard, which can automatically increase the limit on your policy for you on a regular basis and also cover any overages in actual replacement cost in the event of a claim.

On the other hand, inflation guard can also have the undesired effect of unnecessarily increasing your replacement cost limit. Because inflation guard automatically increases the replacement cost limit over time, it can reach a point where the value is much higher than necessary. This is another reason you need to evaluate your policy regularly. If you believe the limit is too high, speak with your insurance company immediately and inquire about an adjustment. An unnecessarily high limit translates into higher premiums that ultimately will not yield any benefits for you.

As with the dwelling limit, you need to keep an eye on your personal property limit. In fact, this limit is more likely to fluctuate than the dwelling limit. If you are a consumer that regularly buys new things, it’s probable that your personal property limit should be increasing. At the same time, if you make any home improvements, those items will also require a higher limit. As an example, even if you didn’t complete a major kitchen remodel but did switch out your appliances, that would still be a fairly significant increase in value. Therefore, you will need to contemplate that in evaluating your personal property limit’s adequacy.

One part of the home insurance policy that is often taken for granted is the personal liability limit. Standard policies come with a $100,000 liability limit but that may be insufficient. If your dwelling and personal property limit is significant, you should consider that you have assets that can be sought in the event of a claim against you. By increasing the personal liability limit (and even considering a higher umbrella policy limit), you will take a major step in protecting what’s yours. Liability limits can often be increased for very little additional premium.

As you can see, it’s always a good idea to stay on top of your insurance policy, whether you live in San Antonio, Virginia Beach, Tucson, Albuquerque, Columbus, etc. By scheduling a new year’s review each January, you can enjoy peace of mind for the next 12 months.


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