Home insurance renewal is required to safeguard your home from damage and theft. Read the article to find out more about homeowner insurance policies.
After years of financial struggle and savings, most people could afford a home. And if you have a dream house already, you have one of the highest luxuries that most people don’t.
While buying a house could be a big monetary decision, planning out all the expenses is no less than that. Most people need to strategize their insurance policies.
Most insurers say first-time buyers have a high chance of failing to include a homeowner insurance policy under their budget. Sometimes, it doesn’t impact them much but still poses a greater risk in the future.
Still have some doubts about home insurance renewal? Don’t worry; we have got this. This article will explain the ABCs of essential things to know before Your home insurance renewal.
What is a homeowner insurance policy, and why should you have it covered?
Consider it a precaution from all the unfortunate situations you might encounter. Accidents, thefts, injuries, perils due to calamities, riots, etc., cause heavy damage to your house and property. In such cases, home insurance will help you cover all these expenses.
And what is better than getting the cost for all the damages without paying it from your pocket? Also, many home loan providers want house owners to have some insurance covered beforehand. This provides them with the surety to establish a deal with the borrowers.
There are a variety of homeowner insurance policies for different homeowners. For example, if you want the actual cost for all the perils, an HO-3 approach will help you.
If you have a rented house, an HO-4 policy will pay for your damages. Similarly, there are different policies for condo, mobile, and old houses. Make sure to choose the best methods depending on your preferences.
Before discussing home insurance renewal, let’s talk about buying home insurance.
What should you consider before obtaining house insurance for the first time?
Home insurance renewal is a very important topic. Buying insurance and extending it have a few aspects in common. Many first-time buyers often need to remember to budget their insurance. As houses and properties are prone to damage, one should have home insurance covered by a genuine insurance provider.
Here are a few things to keep in mind while obtaining house insurance in 2023:
1. Compare different insurance companies:
Maybe it’s more important for you to compare different policies than to buy one. Why? Because you can easily fall for a trap and then lose a chance of getting your dream insurance policy. Make a list of all the insurance companies with genuine prices and find out your better suit.
2. Look for the coverage:
The next step is to see what damages are covered within your policies. There could be times when you might need extra insurance for calamities like floods and earthquakes. If you plan to settle in an area prone to frequent floods, flood insurance will do wonders. If your insurance company provides adequate coverage, settling might be reasonable.
3. Make a list of your belongings:
Inventory lists are the greatest approach to cover everything. Apart from your building, you might need insurance for extra structures like garages and pools and belongings like jewellery, watches, and furniture. You can provide the insurer a list of all your products to acquire maximum coverage.
4. Improve the security of your house:
If you want to get a decent discount on your insurance, house protection must not be overlooked. Setting up a water alarm or a smoke detector could lessen your homeowner insurance cost. Though it depends on factors like where your home is located, having better security reduces your insurance cost.
5. Increase your deductible:
Now, what is a deductible, and why should you raise it? Think of it as an amount paid to the insurance company before it starts to pay for the damages. If you submit your deductible and pay a higher amount up front, you can get a handsome discount at the premium. So, it is better to raise it and save some extra money.
Now that you know about the points to consider before buying home insurance, let’s learn about home insurance renewal in detail.
How does home insurance get renewed?
One very reasonable question people ask regarding renewal is – Does home insurance automatically renew? Well, yes, home insurance gets renewed automatically without causing you any trouble.
Think of it as a subscription that gets renewed until you cancel it. If the subscription connects to your bank account with “autopay” activated, you don’t need to remind yourself about renewal. A home insurance policy works similarly, but with some exceptions:
- Your insurance company tells you 30 to 60 days before the expiry of your policy.
- Your price might change after the home insurance renewal.
Most home insurance renewal happens every year. But what if you miss the deadline? well, you need not worry about missing the deadline because your insurer will let you know well before the deadline.
In case you have a rented house, the company sends you the renewal letter 10 days before. If you are a house owner, then you will be informed 60 days before the expiry. Now, the question is– Should you go for the same policy or review your policy one more time?
How often should you renew your homeowner insurance policy?
Every year you have to renew your policy. As it is a matter of your safety and security, reviewing it every year is better. You should consider going through several things before your renewal. Details of your property and belongings, price change, added or subtracted coverages, terms and conditions, etc.
As it is renewed every year, you have the privilege to make certain adjustments to your existing policy. If the insurance cost looks higher than the market rate, you should consider changing the policy.
Will the home insurance price change after the insurance renewal?
Your renewal cost might increase, decrease or even remain the same. We will discuss the factors that might boost the price of renewing your existing home insurance.
1. The average insurance rate increase in your state:
As claims after damages have increased in recent years, insurance companies file a request to increase the average insurance rate. Sometimes, the injuries are intense because of calamities, and paying for them becomes difficult for the insurers.
In addition to that, labor and construction costs have inflated, and litigations have risen. Your insurance company may have requested the state insurance department to update the rates. Thus, your insurance renewal cost will increase in these cases.
2. Filing frequent claims:
If you file claims frequently or have filed recently, your current rates might shoot up a bit. Also, after a claim, there are chances that your insurance company will increase the rates without waiting for the renewal.
3. Increase in your coverage limits:
If your dwelling coverage increases, your insurance renewal cost will also go higher. As your dwelling coverage depends on the rebuild value of your property, which increases every year, your insurance cost might also increase.
4. Your home needs serious upgradation:
If you have an old home that requires upgradation, your insurer might also increase your renewal rate. The rebuilding cost increases as old homes have structures that need different expertise and might not be widely used anymore. As a result, the price of renewing the home insurance also increases.
5. Poor credit score:
If your credit score is poor, the insurance company might increase your insurance renewal price. A possible reason is that the banks consider poor credit scorers to claim insurance money frequently.
Things to be considered while renewing house insurance?
Home insurance renewal is important, especially if your house is prone to more damage and injuries. You should renew the existing one to prevent you from covering heavy expenses from your pocket. But is it necessary to renew the current insurance policy? Or is it okay to switch insurers if the insurer does not convince one? Let’s discuss everything in detail.
Review the new home insurance renewal terms:
Insurers make changes to the current price of home insurance renewal because of inflation. It will also update the “exclusions to the insurance,” like not covering dog-related claims. It is best to review the renewal statement before renewing your policy.
See if your rates have increased:
It is common to notice an increase in your existing homeowner insurance cost of the renewal. You should see what made your home insurance price increase. It could have been because of filing many insurance claims, poor credit scores, or inflation in rebuilding costs.
If you find the insurance rates way higher than last, you should consider switching to a new insurer.
Decide on the renewal:
Renewing your home insurance is another alternative you ca look for. You can even ask for a discount as you are already a customer through loyalty credit(minimum of 2 years).
But, If your insurance premium has increased by more than you expect, just say 10%, consider switching insurers. You have every right to switch homeowners insurance at any time.
In case your existing plan has not expired, you might have to pay the penalty. Though, you can switch without any penalty once your existing plan expires.
Following are some pro tips that can help you with choosing a new insurance policy.
1. Decide your coverage needs properly:
Checking your requirements before switching to another insurance is always a good method. You can make a list of inventory to get a better idea of the things that have to be covered.
You might discover that you don’t need insurance for some things since the last time. It also helps you organize certain things; letting your insurer know about you will lessen the price.
2. Research different companies:
As there are several companies available in the market, you should search for different companies. It would help if you got some quotes better to understand the coverage, exclusions, and deductibles. Price is only one of the deciding factors. Choose your insurance renewal plan according to the company’s reputation, service availability, and reviews.
3. Get the new policy, then cancel the existing one:
It is imperative to get the new policy before cancelling on the next one. The National Association of Insurance Commissioners (NAIC) also underlines the same to prevent a lapse in coverage.
Make sure that the date of cancellation of your existing policy is just on or after the day of getting your new policy. Confirm about the switching to your previous insurer to prevent automatic home insurance renewal. If you have a pre-paid insurance, you can ask for a refund. Don’t forget to discuss the return with your prior insurer.
As home is a highly valued investment in one’s life, it is important to take the proper precautions in all unfortunate situations. While damages, injuries, accidents, and thefts can cause major losses, it is imperative to get your insurance covered.
If you already have insurance covered, you should see if you can make some changes during your home insurance renewal. You can review your statement, see the changes made, and decide on renewal.
But, if the revised statement does not convince you of your insurer, you can switch to your homeowner’s insurance. You should list your updated requirements, compare different policies, and then make a switch.