The Importance of Updating Insurance Policies Annually

Unless you work for an insurance company or are an insurance broker the thought of regularly reviewing your insurance policies is probably a dreaded task. This is understandable considering the fact that most policies are written in a language the average person finds confusing at best. Nevertheless, reviewing or updating your insurance policies should be done at least once per year under normal circumstances. Not only will annual insurance reviews ensure you have adequate coverage that reflects changing financial or personal circumstances, you can also compare rates to other companies to guarantee you are getting the best rate possible. If you haven’t done so lately, now is the time to review and update the following policies.

Homeowners insurance- Your home is likely your biggest asset and as such should be on the top of your list of policies to review annually. Homeowners insurance generally provides coverage for your home, personal property and liability in the event of an accident or injury that occurs on your property. Make sure you update your policy to reflect any changes in the value of your home or major purchases since your policy was written. If you have made major renovations or have purchased major appliances, jewelry or electronic equipment that is not listed on the original policy you will want to make sure the increased value of the home or personal property is covered on your policy.

Auto insurance- All vehicles must be insured with each state having different minimum requirements. If you are financing a vehicle your lender may require different levels of coverage than the state minimum while the vehicle is financed. Once your vehicle is paid off or if you pay cash, you might be tempted to lower your coverage in order to save money on monthly premiums. Keep in mind that lowering your coverage may help your current financial situation however should an accident occur that results in the loss of use of your vehicle you will then be faced with purchasing a new or used vehicle at a time when you can least afford it. For this reason it is important to review your own financial situation before lowing coverage. If you have the resources to replace your vehicle should it be totaled in an accident, then lowering your coverage to the minimum may work out financially. If on the other hand, the loss of your vehicle would result in further financial hardship, it may be best to have coverage that would at least provide a down payment for a replacement vehicle. Other changes to your auto policy should happen when adding or removing a vehicle, driver or change of address.

Life insurance- Update life insurance whenever life changing events occur. This would include: marriage, divorce, the birth of a child or major financial purchases (buying a house). You should also update your policy to reflect certain employment changes (certain jobs are higher risk due to potential hazards on the job), medical issues or once you begin retirement. The amount of life insurance you have will play a huge role in the security of your family and loved ones in the event of your death. Without adequate insurance your family may face financial hardships that could have been prevented had your insurance been updated to reflect the many changes that happen throughout the years.

Once you have reviewed your policies to ensure they are current and provide adequate coverage that reflect any changes in your life, you can then consider comparing rates with other providers to see if you can save money by moving your policies. The reason it is important to first review the policy is to have a accurate rate to compare. If your policy is not up to date or provide enough coverage, comparing your current rate with new companies will not provide an accurate comparison. Although reviewing, updating or changing policies may not be the most enjoyable task, it is well worth the time and effort required.