Glad to hear you are insured, but it doesn't end there... There is significant value in looking at your property and casualty (home & auto) insurance periodically. There's an exercise we recommend every three years: going through your home and auto insurance to make sure you 1) have proper coverage 2) are paying a reasonable amount for insurance premiums and 3) are working with a reputable company in the event of a catastrophe.
Our experience: Every three years or so is a great time to take your insurance "out to bid". Send all of your insurance declaration pages (home, autos, umbrella coverage, and any other coverage like jewelry or collectibles) to a handful of companies to evaluate your coverage, premiums and carrier. More than likely, this exercise will lead to a savings on premiums while improving coverage. We have found that by following these few steps, this process can be quite painless and well worth the time.
Gather the declaration pages (Dec pages) of each of your insurance policies (home, auto, umbrella, jewelry or collectibles). These are typically 1-2 pages which summarize your coverage, conditions and cost of premiums. You would have received these with your initial insurance binders and typically are the first few pages of your policies. You can also (this is our preference so they are easy to forward over email) contact your insurance company or insurance broker and simply ask them to send you your dec page for each policy. This is a standard request and you should not have any pushback on this ask.
Evaluate your current coverage, read these dec pages and consider your needs. When you take these pages out to bid, you’ll want to compare apples to apples so have a sense of keeping the coverage you have, or considering what needs to be changed. When you have a chance to talk to the insurance companies or brokers, ask questions! Brokers in particular can be a plethora of knowledge, if you don’t understand your coverage, ask! We all need a refresher on insurance terms like deductible, limits, perils, actual replacement value, and HO3...
Send your dec pages to 3-4 insurance companies to evaluate your coverage and ask them if they see any gaps in your coverage and have them provide a quote. In addition to sending these directly to the insurance companies, we also recommend getting a quote from an insurance broker and asking them if they see any gaps of coverage. Independent brokers typically send your pages out to 3-4 insurance companies themselves, resulting in more quotes for you to evaluate.
We always caution- a lower premium may come with the cost of lower coverage, not necessarily a good thing. Don’t try to negotiate down on home coverage saying that your home is not worth the cost the company is trying to insure. They quote the actual replacement value (what it would cost to rebuild) which may be more than what you think your home is worth or what zillow states your home is worth. This is not the time to try to save on annual premiums by arguing your home value and therefore premium down. We have seen homes underinsured burn to the ground, resulting in less cash to rebuild.
Consider umbrella coverage which is extra liability insurance designed to help protect you from major claims and lawsuits against you. An umbrella policy/additional liability policy goes beyond your homeowners liability coverage and helps protect your current assets and future assets. It is typically an inexpensive coverage at a couple hundred dollars per year per million dollars of coverage. Typically, we like to see umbrella coverage close to the current value of your total assets. It may seem excessive, but again, we’ve seen it used and is worth the low cost if you have a net worth, or expected net worth of over $500,000 we recommend it. In our litigious world, umbrella coverage is more important than ever especially if you may be the target of a lawsuit (like if you have a pool, watercraft, appear to have family or personal wealth, etc).
Consider jewelry/collectible insurance. Coverage on typical jewelry such as an engagement ring is really a personal preference. We like to say that if it gives you peace of mind to insure items like this, then it’s worth it for you. If the idea of sending out a premium for jewelry coverage makes you crazy, by all means, forego the coverage.
If you did your homework ahead of time, hopefully when your quotes come back you’ll know what you’re looking for. Coverage from each company should look very similar to each other with minor differences like annual premiums.
If you are comparing matching coverage from each company, your final evaluation will simply be to compare cost of premium and carrier reputation/strength.
Evaluate each carrier, and recognize that the company with the lowest premium may not be the right insurance, even if it has the same coverage as another company. We recommend that you consider company reputation, company strength and customer service of your final insurance company options. Ask around and read online reviews.
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