Having too little or too much insurance can cost you money. A regular insurance checkup can help ensure you have the amount and type of coverage you need.
Just as you should schedule an annual checkup with your primary care physician, you should schedule an annual checkup with your insurance agent. Any number of life events can affect your need for insurance coverage. If you don’t change your insurance program in response, you could be underinsured or overinsured…either of which can cost you money!
Some of the events that could affect your personal property and liability insurance needs include:
Buying a new vehicle or boat. The right insurance coverage can protect any valuable motorized vehicle from damage or theft. And don’t forget about liability. You might not need insurance to legally operate a snowmobile or other motorized off-road vehicle, but you will have additional liability exposures. The right kind and amount of insurance can protect your family if someone outside your immediate family gets injured or suffers property damage due to your use of a motorized off-road vehicle or motorboat.
Making home improvements. If you’ve invested in any improvements that could increase the value of your home, you might need additional insurance. Other types of improvements, such as updating the wiring, heating or air conditioning in an older house, or installing an alarm system, could qualify you for a discount.
Operating a home-based business. With certain narrow exceptions, your homeowners policy does not cover business property. It also does not cover business-related liability, so if a client visited your home and tripped on the stairs, your homeowners policy would probably not cover the cost of any injuries.
Joining a nonprofit board. Volunteering on a nonprofit board can create two types of liability exposures for directors. First, an individual can sue individual board members for injuries caused by the organization or an employee. Before working with a nonprofit, particularly one that serves children or other vulnerable populations, check whether it carries directors’ and officers’ liability (D&O) insurance to protect board members. (This coverage will protect directors and officers from claims involving negligence, but not criminal acts.)
Second, an organization could sue its directors or former directors for decisions made that negatively affect the organization. Your homeowners policy provides liability coverage, but only for claims involving property damage or bodily injury. These policies also exclude coverage for professional services. So even if you offer your services to a nonprofit in an unpaid capacity, your homeowners policy might not cover you if the nonprofit sued you. A personal umbrella liability policy can provide coverage for exposures your homeowners policy excludes. It can also provide high-limits coverage to protect you when a claim costs more than the limits of your homeowners policy.
Changing your family status. Marriage, divorce, the birth or adoption of a child, and the moving away of an adult child can create changes to your health insurance needs. It can also change your property and liability coverage needs. For example, when a college graduate finally moves out of the house, you probably won’t need to keep her on your auto policy. Or if marriage adds another car to your garage, you might qualify for a multi-car discount on your auto policy.
Buying high-value jewelry, firearms, antiques, art or collectibles. Your homeowners policy has separate, lower limits for these types of frequently stolen and difficult to replace items. A policy rider, or low-cost addition to your homeowners policy, can provide adequate protection for some valuables. But if you have something of particular value, you might want to insure it separately with a “floater” policy, a special type of coverage designed to cover property that easily moves from one location to another. Floater policies can be written on either a scheduled or unscheduled basis. In a scheduled policy, the policy includes a list of items with their description and value.