Don't Drop the Ball on Your Insurance Resolutions

The countdown has ended, the parties are over, and the ball has dropped to officially start the New Year. Now it’s time to make sure you don’t drop the ball on your resolutions! While many of us resolve to eat healthier, exercise more, stop smoking, become more organized, etc., reviewing your insurance policies should be a top resolution on your list, too!

That’s because many things can change over the course of a year, and you may not realize the impact of all those changes on your insurance policies. Our latest study on personal insurance shows that six in ten high-net worth individuals are overpaying to be underinsured.  

Reviewing your insurance policies can help ensure you have the right amount of protection for what you are paying and avoid any coverage gaps. For instance, if you’ve acquired valuable assets—like a new car, a boat, or artwork—your existing policies may not provide adequate coverage. Conversely, if you’ve downsized or sold assets, you might be overinsured. A comprehensive review helps you assess your current needs and make necessary adjustments to align with your financial situatio

Here are the top three insurance resolutions you should prioritize this month.

Insurance resolution #1:
Assess your auto policy

Auto insurance provides financial protection against accidents, theft, and other unforeseen events. However, many of us often overlook the importance of regularly reviewing our auto insurance coverage. An annual review can ensure that your policy meets your current needs and reflects changes in your life, including:

• Have you purchased a new vehicle or sold one? If you’ve bought a new car, it may have different coverage needs compared to your previous vehicle. Luxury or high-performance cars may require different coverage. If you’ve sold or traded in a car, your policy needs to reflect that change, which could impact your premium. In addition, if you have a new car, does it have more safety features? If so, auto insurers often offer discounts for safety features, which could help reduce your rates.
  
  
• Have you moved? Moving to a different state or even a new neighborhood can affect your premiums. Areas with higher crime rates or more traffic congestion may lead to increased rates. Conversely, moving farther away from a city may lead to reduced rates.
  
  
• What life changes have you experienced? Events such as marriage, divorce, or having a child can also influence your insurance needs. For example, adding a teen driver to your policy will require adjustments to your coverage. Plus, some auto policies offer discounts if your youthful drivers get good grades, which could also reduce your premiums.
  
  
• Have your driving habits or those of your covered family members changed? If you’re putting more or less mileage on your vehicles than in prior years, your insurance coverage may need to be adjusted. If you’re no longer working remotely but are driving into the office more, that could also influence your coverage. If your child is out of state at college and not driving a vehicle, you should let your insurance advisor know, as it could reduce your coverage and rates. Also, if you’ve had any accidents or moving violations, they may become a factor in your policy coverage. 

Insurance resolution #2:
Evaluate what your home insurance covers

Insurance provides financial protection for your home against various risks, including damage from natural disasters, theft, and liability claims. However, many homeowners or renters purchase coverage and then don’t realize that certain changes could impact their coverage, such as:

• Has your property value changed?  If you’ve made significant improvements, such as adding a new room or upgrading your kitchen, your home’s value may have increased.  An annual review allows you to adjust your coverage limits accordingly, ensuring you are adequately protected in the event of a loss.
  
  
• Have you purchased additional personal items? Your personal belongings are also covered under your homeowners’ insurance policy. If you’ve acquired valuable items, such as expensive electronics, jewelry, or artwork, you may need to increase your coverage limits. Additionally, if you’ve sold or donated items, you might be able to reduce your coverage.
  
  
• Is Mother Nature impacting your property risks more? Numerous factors can influence the risk associated with your property. For example, if you live in an area prone to natural disasters, such as floods or wildfires, your risk may increase over time. Additionally, changes in your neighborhood, such as an increase in crime rates, can also affect your property risk profile.
  
  
• Are there additional family members living in your home? More family members may mean more items that will need to be covered in case of a loss or theft.
  
  
• Have you added any safety features? Adding the latest smoke and fire alarms, water shut-off valves, wind mitigation protection, security alarms, pool alarms, etc., could now qualify you for safety discounts on your policy.

Insurance resolution #3: Determine if you need (or have enough) personal excess or umbrella liability coverage

In today’s increasingly litigious society, having adequate liability coverage is more important than ever. While standard homeowners’ and auto insurance policies provide a certain level of liability protection, they may not be sufficient to cover all potential risks. This is where personal excess or umbrella liability coverage comes into play.

Excess liability coverage provides added protection beyond the limits of your primary auto, homeowners’ and even watercraft insurance, and helps protect your assets while providing peace of mind in the event of a significant claim. 
 

Now is a good time to review if you need excess liability coverage, or if you already have it, if you need to adjust your limits. Consider the following:

• Changes in lifestyle: Major life events such as marriage, divorce, the birth of a child, or retirement can impact your liability exposure. For instance, if you have a new teen driver in the household, your risk of an auto accident may increase, necessitating higher liability coverage.
  
  
• Growth in assets: As your assets grow—whether through home equity, investments, or savings—so does your exposure to liability claims. If you acquire new assets, such as a vacation home, rental property, or valuable collectibles, you may need to increase your umbrella coverage limits to adequately protect these assets.
  
  
• Changes in risk factors: Your risk profile can change based on various factors, including your lifestyle, occupation, and activities. For example, if you engage in activities that increase your risk of liability, such as hosting large gatherings or participating in sports, you may need additional coverage. 

Additional annual considerations

These could impact all your insurance policies, coverages, and rates.

Market changes and competitive rates: The insurance market is constantly evolving, with new companies entering the market and existing companies adjusting their rates. You may find better rates or coverage options that suit your needs, potentially saving you money while enhancing your protection.

Availability of discounts and savings: Insurance companies frequently update their discount offerings. Some common discounts include bundling auto and home policies, adding safety devices, loyalty, and more.

Changes in regulations: Insurance regulations can change from year to year and state to state, impacting your coverage and premiums. By reviewing your policies, you can ensure that you are compliant with any new laws or requirements that may have been enacted. Staying informed about these changes can help you avoid potential penalties and ensure that you are receiving the full benefits of your coverage.

Gaining clarity on policy terms and requirements: Insurance policies can be complex, with various terms and conditions that may change over time. Fully understanding what is covered and what is not can help prevent unpleasant surprises when you need to file a claim. 

Schedule an annual review with an advisor

Start the year off right by ensuring that you are adequately covered for whatever comes your way. Taking the time to assess your insurance policies can lead to better protection, potential savings, and peace of mind. The goal is not just to have insurance, but to have the right amount of insurance that fits your life.

Engaging with an experienced insurance advisor familiar with your area can provide valuable insights into your current policies, help you understand your coverage options, and guide you in making informed decisions. An advisor can also help you navigate the complexities of insurance, ensuring that you have the right coverage for your unique needs—this year and in future years.