When to Update Your Home Insurance Policy

When you shopped for your dream home, you also likely researched homeowners’ insurance because your mortgage lender required you to get a policy before they’d finance your home purchase. And if you are like 70% of homeowners, you haven’t reviewed your policy since signing your mortgage papers and aren’t confident about what it covers.

While updating your home insurance policy may not be the first thing you think of when making significant life changes, you may leave valuable coverage and benefits on the table. Learn when to update your home insurance policy and why doing so can benefit you in the long-term.  

When Doing Home Renovations

Although your contractor will have their own insurance, ensure your policy covers theft or loss of materials if you plan to store building supplies like sheetrock, appliances, or cabinets in your garage or basement. 

It is a good idea also to confirm that your existing policy covers injuries to visitors or workers. Undergoing a home remodel, even for a kitchen or bathroom, may require a temporary boost in coverage to ensure you are fully protected.  

Home improvement upgrades or adding square footage may necessitate more coverage and increase your annual premium. However, this ensures that the replacement cost of your home and belongings is accurate and that you are fully covered in the event of a tragedy like a natural disaster or fire.    

Remodeling Magazine’s 2022 Cost vs. Value Report states that a major renovation of a kitchen adds $83,025 to the home’s resale value. Once a home improvement project is complete, update your policy to protect your now more valuable house and home inventory.   

When Starting a New Business

Speak with your insurance agent if you are planning to start a home business. While many home insurance policies cover the replacement costs of business equipment, typically around $2,500, this is unlikely to be sufficient coverage for most home businesses. 

Depending on the nature of your business, you may also want to update your policy to cover liability and lost income. 

Common ways for home businesses to update their insurance and ensure coverage include a homeowners’ policy endorsement, a business owner’s policy, and an in-home business policy. 

When Buying or Selling a High-Value Asset

Homes often contain high-value assets like artwork, jewelry, antiques, and collectibles. Inform your insurance agent if you purchase something of value to determine if your existing coverage extends to the newly-purchased item. In most cases, the coverage is limited to about $2,500 based on the type of item and the cause of loss.

If your new asset is not covered, you may need to add a Valuable Items Plus (VIP) endorsement to your policy to protect your new possession. If you fail to update your insurance coverage when you make a major purchase, you may forfeit your right to file a claim if it is destroyed by fire, water damage, or other circumstances. 

You should also inform your agent when you sell a high-value asset. 

When Adding Home Security Features

If you add safety features like deadbolts, a fully monitored security system, smart locks, or a burglar alarm, you may be able to score a discount on your homeowners’ insurance premiums.  

Having more than one protective device or 24/7 professional monitoring can lower your rate even more. Check your policy’s declarations page for your current discount before contacting your agent so you know exactly how much your new features lower your premium.

When Adopting a Dog

Adopting a dog is one of the most fulfilling decisions you can make. But you may be surprised to learn that you will pay more for your homeowners’ insurance once you bring the pup home.  

Your liability coverage protects you financially if someone gets hurt on your property. Once you adopt a dog, there is a possibility of someone being bitten or knocked over. Dog bites are a common occurrence, and according to the Insurance Information Institute, dog-related injury liability cost homeowners $882 million in 2021

Some insurance companies deny coverage for certain breeds or charge more to cover them. These breeds include rottweilers, pit bulls and siberian huskies, so check with your insurance provider about coverage before adopting.

Periodically Review and Update Your Homeowners’ Insurance 

Homeowners’ insurance policies provide peace of mind and financial protection against damage and liability. By reviewing your homeowners’ insurance policy and keeping your coverage up-to-date, you can ensure your home and its contents are fully covered for its current value. 

Finance is Us is an online finance resource guiding consumers through difficult financial decisions. Our information can help you make an informed choice and stretch your dollar further. 


Disclaimer: All content on this site is information of a general nature and does not address the circumstances of any particular entity or individual, nor is the information a substitute for professional financial advice and services.

Recent posts