Why You Should Review Your Home Insurance Coverage Annually, According to State Farm

Raise your hand if you purchased a homeowners insurance policy when you first moved into your house…and haven’t looked at it since. Turns out, you’re not alone. Many folks pay little attention to their policies after the initial sale. However, over time, as you make renovations, purchase new items or make other improvements, skipping over an annual home insurance review could lead to a gap in coverage.

We partnered with State Farm® to help explain how to avoid this common pitfall. They recommend starting by asking yourself three questions:

When you upgrade or improve your home—like installing an impact resistant roof—you may increase your home’s estimated replacement cost. As part of your policy’s provisions, you have 90 days to notify a State Farm agent of any remodeling or additions to your home that increases its replacement cost by $5,000 or more.

State Farm provides coverage options that automatically adjust each year in an effort to compensate for increases in construction costs in your area. However, certain conditions such as severe weather can increase the demand for labor and materials and raise costs beyond normal inflation. It’s important to update your coverage amount each year to keep up with the changing economy.

Market conditions in your area may impact the amount it will cost to rebuild your home if you experience a loss. Replacement cost estimates are influenced by supply of labor, demand for labor and the cost of construction materials. Keeping up with the current market conditions in your area and changing your home insurance coverage amount accordingly will help you maintain coverage equal to at least 100 percent of the estimated replacement cost of your home.

OK, now that you’ve taken stock of renovations and the changing market, the next step is to set up a meeting with your State Farm agent. Conducting a home insurance review with an agent at least once each year can help you determine if your policies still make sense for your current situation. During this meeting you should:

1. Ask about discounts. Before you renew your policy, speak with your agent about discounts that may be available. You may qualify for discounts for alarm system and bundling or reduce your premium by choosing higher deductibles.
2. Ask to review your auto policy. If you combine your home or renters insurance with auto insurance to get a discount, consider reviewing your auto coverage as well. Ask them about any safe driving discounts you might be eligible for.
3. Review home renovations. If you have added on to your home or updated any rooms in the house, be sure to talk about them with your agent to make sure your coverage reflects the changes.
4. Talk about any landscaping changes. Any new sprinkler systems, sheds, pool or even a new riding mower may be a reason to make changes in your policy.
5. Share any changes in the appliances. Like home renovations, updating your furnace or air conditioner may increase the value of your home.
6. Confirm your home is insured for the estimated cost to rebuild. State Farm suggests you select a coverage amount equal to at least 100 percent of the estimated replacement cost of your home, but the choice is yours. You should also make sure any replacement cost estimate reflects the actual characteristics of your home. Insuring your home for at least 100 percent of its estimated replacement cost—not the current market value—could give you the means to replace your home entirely in the event of a loss.
7. Share any significant life changes. Getting married, having a baby, starting a new home business or even getting divorced may trigger changes to your property that are worth a conversation to address the correct coverage with new needs. Your agent can make you aware of extra coverage available for jewelry or additional coverage for business property.
8. Ask questions about current coverages, limitations and exclusions. You can get the best out of meeting with your agent by asking about your current coverages and understanding any limitations and exclusions to the homeowners policy. You can be better prepared for a loss when you are aware of what is covered and what is not.