When it comes to insurance, many people set their policies and forget about them, trusting that they’re adequately covered. However, our lives, assets, and external risks change over time, which means our insurance should adapt.
That’s why reviewing your auto and home insurance annually is more than just a good idea – it’s essential. Here are the top five reasons why an annual review can save money, provide better protection, and give you confidence in your coverage.
1. CHANGES IN YOUR LIFE CIRCUMSTANCES
Life is constantly evolving, and so is what you need to protect. Major life changes, like moving to a new home, getting married, having kids, or even sending children off to college, can significantly impact your insurance needs.
Home Insurance
If you’ve recently renovated your home, added a new addition, or upgraded the kitchen or bathroom, your home’s value may have increased. Failing to update your policy could mean you’re underinsured, leaving you to cover repair or rebuilding costs out of pocket in the event of a disaster.
Auto Insurance
If you or someone in your household started or stopped commuting, or a young driver has joined or left the policy, it’s worth looking into adjustments. Lifestyle shifts often impact your driving habits, and insurers take this into account when calculating your premium.
By reviewing your policies yearly, you can ensure your coverage aligns with your current needs.
2. CATCH POTENTIAL SAVINGS & DISCOUNTS
Insurance companies frequently offer discounts for various reasons, and you may qualify for more savings now than when you originally took out the policy. Some common discount opportunities include:
- Safe Driving: If you’ve had a clean driving record for a year or more, you might qualify for a safe-driver discount.
- Home Security: Installing a security system, smoke detectors, or deadbolts could make you eligible for home insurance discounts. Some insurers even offer savings for being part of a neighborhood watch program.
- Bundling Policies: Many insurance providers offer multi-policy discounts for bundling home and auto insurance. If you have policies with different providers, consider consolidating them with one to take advantage of these savings.
Without an annual review, you may miss out on potential savings that could lower your premiums and add up over time.
3. ADAPT TO MARKET & VALUE CHANGES
Insurance isn’t static. As property values and market conditions fluctuate, so does the cost to rebuild your home or replace your vehicle. Reviewing your policies helps you adjust your coverage limits accordingly. Here’s why this is critical:
Home Replacement Costs
The cost of labor and building materials can vary, and if there’s a spike due to inflation or natural disasters in your area, the amount it would take to rebuild your home might increase. An annual review can ensure your home insurance policy reflects the actual cost to replace your home if a total loss occurs.
Car Value Depreciation
If you drive an older vehicle, its market value is likely decreasing each year. This may mean you’re paying more for comprehensive and collision coverage than is justified by the car’s current worth. Adjusting these coverages can potentially save you money while maintaining essential liability protection.
By revisiting your insurance annually, you can avoid both underinsurance and overinsurance, ensuring your policy is aligned with the current market landscape.
4. ADJUST FOR POLICY OR LEGAL CHANGES
Insurance policies and legal regulations evolve over time, and staying on top of these changes can help you ensure compliance and maximize your benefits. Here are a few reasons why this matters:
Policy Adjustments
Insurance companies periodically modify policy terms, exclusions, and limits based on new data, regulations, or company strategies. These updates might introduce changes that could either benefit you or require action on your part to maintain adequate protection.
State or Federal Mandates
Sometimes, regulatory changes at the state or federal level impact coverage requirements or options. For instance, some states have passed laws mandating higher minimum liability coverage, which may affect your auto insurance policy. Reviewing your insurance annually ensures you comply with new regulations, avoiding potential penalties or coverage gaps.
Added Endorsements & Riders
Insurers may periodically introduce new endorsements (additional coverages) to respond to changing needs. For example, if you’re a remote worker using equipment at home, your provider might now offer an affordable rider to cover business property. An annual check-in with your agent helps you stay aware of any policy enhancements that could improve your protection.
5. IMPROVE YOUR DEDUCTIBLE STRATEGY
The deductible is the amount you pay out of pocket before insurance coverage kicks in, and adjusting it is a key strategy for balancing coverage and premiums. Your annual review is the ideal time to re-evaluate your deductibles and find the right balance for your current situation. Here’s why this is a smart move:
Lowering Deductibles
If you’ve accumulated some savings and want to minimize out-of-pocket expenses in case of a claim, lowering your deductible might be a good choice. This means you’ll pay slightly higher premiums, but you won’t have to cover as much out of pocket for a claim.
Raising Deductibles
Conversely, if your financial situation allows, raising your deductible can significantly reduce your premiums. For people who drive infrequently or live in low-risk areas, increasing the deductible may be a wise way to save on premiums while still ensuring ample protection.
Assessing your deductible strategy annually allows you to align it with your budget and risk tolerance, providing flexibility in the face of life’s uncertainties.
When was the last time you reviewed your policies? If it’s been over a year, consider making this annual checkup part of your calendar. An annual insurance review is a simple, proactive step that can pay off significantly.
By sitting down with your agent or taking some time to evaluate your coverage, you can adapt to changes in your life, secure new savings, keep pace with market trends, stay compliant, and optimize your deductibles. It’s a small time investment that can make a big difference in how well your auto and home insurance protects you – and how well it fits your budget.
If you need help finding the best insurance coverage for the best price, speak to a SimplyIOA agent at 833.872.4467 or get a quote online now.
