Understanding Insurance Policies

Once a year, you get the opportunity to review your homeowner's insurance policy before your policy renews.

When you get your renewal statement in the mail, don't just sign it and send it back in. Instead, carefully review your policy and coverage.

Examine the Costs

When you get your homeowner's insurance policy, be sure to look carefully at the costs that you are being charged for your coverage. Will your new policy cost more or less? What impacted the change in price for your policy?

If your policy costs significantly more than it did in the past, it is a good idea for you to compare offers from different insurance companies. Insurance companies often offer different rates, even when they are offering essentially the same coverage. This happens because each insurance company has their own formula for calculating risk.

Check Out Discounts

Next, check out and see what discounts your insurance company is offering you on your homeowner's policy with your renewal. For example, are you getting a discount for bundling your insurance with the same company, or are you getting a discount for being a member of an affinity group? If you previously were offered discounts on your insurance coverage, make sure you are being offered the same or better discounts on your new policy. You can also ask your insurance company to check and see if there are any other discounts that you qualify for, such as a discount for being a loyal customer or a discount for having certain security measures set-up around your home.

Verify Your Coverage

Finally, be sure to carefully look at the coverage that you are paying for. With a homeowner's insurance policy, the four main parts of your policy cover your personal property, dwellings, additional living expenses, and liability coverage. Your needs for each of these categories may change over time.

Perhaps you have a lot more personal property than you used to, so you may want to increase the coverage limit for your personal property. Or perhaps the housing marketing has really had a nice upswing in your area, so you are going to want to pay for more dwelling coverage. Make sure your coverage meets your current needs.

When you get your homeowner's renewal statement, you need to look at it closely and figure out if the costs are the same, if you are getting all the discounts you qualify for, and make sure you are getting the coverage you need.