Insurance needs change as circumstances in your clients’ lives change, which is why an annual insurance review is recommended by the Insurance Information Institute. When you’re reviewing insurance coverage, these questions can help insurance professionals and their clients figure out whether they may need to make a change to coverage:
1. Have you gotten married or divorced?
If you have gotten married, you may qualify for a discount on your auto insurance. Couples may bring two cars into the relationship and two different auto insurance companies, so take the opportunity to review your existing coverage and see which company offers the best combination of price and service.
If you are merging two households, you may need to update your homeowners’ insurance. And you may want to consider increasing your insurance for any new valuables received, such as wedding gifts, and for jewelry, such as wedding and engagement rings.
After getting married, it is important to review your life insurance needs. If one spouse is not working, he or she might be dependent on the working spouse’s income; if so, reviewing life and disability insurance coverage is prudent.
2. Have you had a baby?
If you have recently added a child to your family, whether by birth or adoption, it’s important to review your life insurance and disability income protection. If you are planning for your life insurance to match your survivors’ expenses after your death, the new child will no doubt add to those expenses, requiring more life insurance to keep your family secure.
If you plan to save for your child’s college education, life insurance can assure completion of that plan.
3. Did your teenager get a driver’s license?
It’s generally cheaper to add your teenagers to your auto insurance policy than for them to purchase their own. If they are going to be driving their own car, consider insuring it with your company so you can get a multi-car discount. And choose the car carefully — the type of car a young person drives can dramatically affect the price of insurance. You and your teens should choose a car that is easy to drive and would offer protection in the event of a crash. Also, encourage your kids to get good grades and to take a driver training course. Most companies will give discounts for getting at least a “B” average in school and for taking recognized driving courses. If your teenagers move at least 100 miles from home — for example, to go to college — you can get a discount for the time they are not around to drive the car (assuming they leave the car at home).
4. Have you switched jobs or experienced a significant change in your income?
If you had life and disability insurance through your former employer, and your new employer does not provide equivalent protection, you can replace the “lost” coverage with individual policies. In the case of an income increase, you may have taken on additional financial commitments that your survivors will depend on. Make sure to review your life and disability insurance to ensure it is adequate to maintain those commitments.
5. Have you done extensive renovations on your home?
If you have made major improvements to your home, such as adding a new room, enclosing a porch or expanding a kitchen or bathroom, you risk being underinsured if you don’t report the changes to your insurance company. An increase in the value of the structure of the home may require an increase to your homeowners’ insurance coverage limits.
And don’t overlook new structures outside of your home. If you built a gazebo, a new shed for your tools or installed a pool or hot tub, you should speak to your insurance professional.
6. Have you decided to buy a second home?
If you are searching for a vacation home or a second home you might retire to, make sure you research the availability and cost of homeowners’ insurance before you commit to the purchase The very factors that make a vacation home seem ideal, whether it is a waterfront property or a mountain retreat, can often introduce risks that make it costly and difficult to insure, such as proximity to the coast and the likelihood that it will be vacant for long periods of time. In the event you have already bought a vacation home, don’t skimp on the insurance. The risk of theft or disaster is just as significant, if not more so, in a second home as in your primary residence.
7. Do you need flood insurance?
If your new property is close to the water, be sure to ask about flood insurance. Damage to your home or belongings resulting from flood is not covered under standard homeowners’ insurance policies. Flood insurance is available from the National Flood Insurance Program (NFIP), as well as some private insurers, and is generally sold through private agents and brokers.
8. Have you acquired any new valuables such as jewelry, electronic equipment, fine art, antiques?
A standard homeowners’ policy offers only limited coverage for highly valuable items. If you have made purchases or received gifts that exceed these limits, you should consider supplementing your policy with a floater or endorsement, a separate policy that provides additional insurance for your valuables and covers them for perils not included in your policy, such as accidental loss.
Before purchasing a floater, the items covered must be professionally appraised. Keep receipts and add the new items to your home inventory.
9. Have you retired?
If you commuted regularly to your job, in retirement your mileage has likely plummeted. If so, you should report it to your auto insurer as it could significantly lower the cost of your auto insurance premiums. Furthermore, drivers over the age of 50-55 may get a discount, depending on the insurance company.
Reprinted with permission from the Insurance Information Institute.