Smart Financial Management Means Updating Your Home Insurance

Is your home insurance up to date? Running a household is no easy task. It’s a constant battle keeping up with kids’ schedules, paying bills on time, and trying to keep the place somewhat clean. Everyday life is always busy, and that can make it harder to stay on top of those tasks that are always at the back of your mind, like updating your home insurance.

But it’s a task worth carving out the time for. New belongings, home renovations, and even just inflation or changing costs you aren’t aware of can leave your insurance policy out of date. This means you might be underinsured in the event of an emergency.

As you review your policy, find out what’s protected with fire insurance and make sure you have enough coverage to rebuild your home and replace your belongings in case anything happens.

Contents

This covers all of the personal belongings inside your home at the time of loss, such as electronics, furniture, clothing, food, and more. Certain valuables such as jewelry, artwork, or furs might be subject to special limits, and you will need extended coverage to make sure you can replace everything.

You will have to complete a Proof of Loss that outlines all of your lost belongings. If you can, check digital receipts, so you know the make and model of what you need to replace.

Structure

Repairs to the physical structure of your home or the cost of rebuilding your home from the ground up are covered by this part of your policy. Structure coverage pays for the construction costs, including materials and labor, not the market value of your home. It’s an important distinction.

As you review your insurance policy, check your Structure coverage against local construction costs per square foot. The rising cost of local labor or building materials may have outpaced your policy’s inflation guard if you had one at all.

Additional Living Expenses

This is for the costs you face when you can’t live at home. You will still be expected to keep up with mortgage payments, property taxes, and other costs even as you rebuild your home, so the additional cost of a rental can really hurt your finances. But this part of your insurance can compensate you.

Pay attention to your policy limits and compare them to rental costs in your area. Would your limit be enough if you had to rent an apartment big enough for your family for a year?

What If You Rent?

Homeowners aren’t the only ones who need to pay attention to their insurance policy. If you’re a renter, don’t expect to be covered by your landlord’s policy. That will cover damage to the structure itself but won’t help you. Approximately 50% of renters don’t have insurance.

Tenants’ insurance includes coverage for Contents, Additional Living Expenses, and liability insurance. In the event of a fire, your policy will help you replace lost belongings and pay for expenses while your apartment is being repaired. Liability insurance protects you in case someone hurts themselves in your apartment or you cause damage to the building that your landlord would have to repair, as well as accidental damage to a neighbor’s property. If you accidentally start a kitchen fire or a dishwasher overflows, causing water damage in your unit or the unit below, you’ll be glad you had insurance.

Credit: wayhomestudio via Freepik