Buying and Saving Money 3

How often should I review my policy?
There are four events that should trigger a review of your policy:

1. When your policy comes up for renewal
Take the time to review your coverage and call your agent with any questions or concerns that you may have regarding your homeowners insurance. Ask yourself the following questions:

- Has the company made any changes in coverage since last year?
- Should I raise the deductible to save money?
- Am I taking advantage of all available discounts?
- Do I need to raise the amount of coverage for liability, personal possessions or the structure?
- Do I need flood, earthquake, sewer back up, floaters or an umbrella policy?

2. Major purchases or alterations/improvements to your home
If you have made any major purchases, make sure that you have the proper coverage. And, don’t forget about gifts. If you have received a diamond engagement ring or if a member of your family has bought you expensive artwork or a computer, talk to your agent about either increasing the amount of insurance you have for your personal possessions or purchasing a floater/endorsement for these items. A floater will give you higher and broader coverage for these items than you have under your homeowners policy.

If you have made major improvements to your home, such as adding a new room, enclosing a porch or expanding a kitchen or bathroom, you risk being underinsured if you don't report the increase in square footage to your insurance company. Don’t forget about new structures outside of your home. If you have built a gazebo, a new shed for your tools or installed a pool or hot tub, you need to speak to your agent. Keep receipts and records in case you need to forward copies to your company.

3. You have made your home safer
If you have installed a state-of-the art fire/burglar alarm system or upgraded your heating, plumbing or electrical system, make sure that your insurance company knows about these improvements. You may qualify for a discount.

4. Major lifestyle changes
Marriage, divorce, or adult children who move back into the family home, can all affect your homeowners insurance. When people move in or move out, they take their belongings with them. And you may need additional coverage if there is a sizable increase in the value of the belongings in your home.

Starting a home-based business can also trigger changes in your coverage. You will need to get additional coverage for business liability and equipment. If the business is your primary source of income, you may need a business owners Package Policy (BOP). You may also need professional liability coverage, which is excluded under in-home business and business owners policies. For more information, see Business Insurance.

Should I purchase an umbrella liability policy?
If you are ever sued, your standard homeowners or auto policy will provide you with some liability coverage, paying for judgements against you and your attorney's fees, up to a limit set in the policy. However, in our litigious society, you may want to have an extra layer of liability protection. That's what a personal umbrella liability policy provides.

An umbrella policy kicks in when you reach the limit on the underlying liability coverage in a homeowners, renters, condo or auto policy. It will also cover you for things such as libel and slander.

For about $150 to $300 per year you can buy a $1 million personal umbrella liability policy. The next million will cost about $75, and $50 for every million after that.

Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage. Most insurers will want you to have $500,000 or $1000,000 of liability insurance on your auto policy and your homeowners policy before selling you an umbrella liability policy for $1 million of additional coverage.