CHICAGO—Personal finance goals are among the more common new year’s resolutions, and the Property Casualty Insurers Association of America (PCI) recommends adding a review of your existing insurance coverage to your 2018 financial to-do list.
“The first of the year is the perfect time to get your financial house in order, and an evaluation of your insurance policies should always be part of that effort,” says Chris Hackett, PCI’s senior director of personal lines policy.
Car crashes, volatile weather, and unexpected emergencies can wreak havoc on personal finances if you don’t have proper insurance coverage. “It’s important to make sure you’re prepared for today’s risks,” said Hackett. “Updating your insurance policies can give you the peace of mind that comes with knowing you’re properly covered for any unexpected events that may occur in the new year.”
PCI offers the following tips for conducting an annual insurance review:
1. Talk with your agent or company. Schedule a conversation to discuss your policy and coverage options. Your insurer can help you determine the right amount of coverage for your home and auto policies.
2. Understand the details of your policies. Know your deductibles and make sure you have a solid understanding of what your policies cover. Check on whether your homeowners policy pays replacement cost or actual cash value for a covered loss. Replacement cost is the amount necessary to rebuild a home with construction materials of like kind and quality. Actual cash value takes depreciation into account. On your auto policy, review your comprehensive and collision coverage as well as towing and rental car coverage.
3. Consider additional policies, such as flood insurance and earthquake insurance. Flood coverage needs to be purchased as an additional policy, and there is typically a 30-day waiting period between the date of purchase and when flood coverage takes effect. Earthquake coverage also needs to be purchased as a separate policy, and your insurer can help you assess your risk. Deductibles can range from two to 25 percent of the home's replacement value.
4. Investigate coverage options for renters. Renter’s insurance is an affordable and easily accessed resource for students, tenants, and renters. Policies generally cost $10-$30 a month and can help cover the cost of replacing personal items damaged by fire or theft, for example. It also can provide accidental injury coverage for guests.
5. Shop around. It’s always a good idea to periodically compare offerings from other insurers, but be aware that the best deal isn’t always the best option. You can also inquire about discounts that may be available. Having a good driving record, taking steps to safeguard your home, and purchasing multiple policies often can reduce your costs.