Insurance coverage tends to be a “set it and forget it” experience for many consumers. Whether they are buying renters’ or homeowners’ policies, automobile coverage or life insurance, most people select a carrier that offers an agreeable rate and acceptable coverage levels and then file those policies away in a desk drawer forever—or until an accident happens.
Storms like Hurricane Sandy show that homeowners’ and renters’ policies won’t cover damage inflicted by massive flooding—only flood insurance can do that. But if you don’t pull those insurance policies out and review them once year, then you won’t know what your situation is. Life events, family changes, major purchases and myriad other shifts can impact your insurance coverage, rates and premiums.
The National Association of Insurance Commissioners recommends an annual review of all insurance policies. Here are three primary types of coverage and a few life circumstances that you should be discussing with your provider on an annual basis:
Changes that could impact your automobile policy:
1. Did you pay off your vehicle loan? If a third party no longer holds title on your car, you may be able to reduce your coverage levels and, subsequently, your rates.
2. Did a teen driver in your family get his or her license? In most cases this will increase your monthly or quarterly premium payments.
3. Did you install a security system in your car? This move may help you reduce your premium rates, since your vehicle is now safer from thieves (and, as such, not as big of a risk for your insurer).
4. Did you incur one or more moving violations, which, when accumulated may result in higher monthly or quarterly insurance premiums?
Changes that could impact your homeowners’ insurance policy:
1. Has any member of your household started a business from home? You’ll want to make sure that, in event of a problem, the policy covers the equipment, furniture and other expenses associated with the home-based business.
2. Did you install a Jacuzzi, pool or trampoline at your home? These additions could result in higher premium payments due to the risk involved with using them.
3. Did you make any major purchases (jewelry, boats, motorcycles, etc.) that are now kept at your home and that should be covered in the event of a fire, flood or robbery?
Changes that could impact your life insurance policy:
1. Did you get married, divorced or have children within the last 12 months? These life changes could have an impact on how your life insurance policy is structured.
2. Did your income levels change significantly over the last year? Discuss the fluctuations with your insurance provider to determine if your insurance levels should be raised or lowered. (If, for example, you are the primary wage earner and you received a 20 percent raise, then you’ll want that to be reflected in your life insurance coverage.)
3. Has there been a significant change in your health or to that of your spouse or domestic partner? Both positive and negative health changes of significance can affect your ability to obtain life insurance and possibly also impact your current policies. Be sure to talk to your provider about both on an annual basis.
Try to schedule your annual insurance review at the same time every year—preferably before your new “coverage year” begins—so that you can get a full picture of the last 12 months and of the coming year. Ultimately, your goal should be to balance affordable premiums with sufficient coverage that’s provided by a company that understands and meets your insurance needs.
This article has been prepared for informational purposes only. The accuracy and completeness of this information is not guaranteed and is subject to change. Since each individual’s financial situation is unique, you need to review your financial objectives to determine which approaches might work best for you.
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