CHICAGO- As Americans start thinking about New Year’s resolutions, the Property Casualty Insurers Association of America (PCI) recommends putting a review of your existing insurance coverage at the top of your financial goals 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 Bob Passmore, assistant vice president, personal lines policy at PCI. “It’s so important you’re prepared for the many risks we face today. Car crashes, volatile weather, and unexpected emergencies can wreak havoc on personal finances if you don’t have proper insurance coverage.”
Unfortunately, millions of families and businesses are underinsured or uninsured for natural catastrophes, particularly for flooding events. Floods are the most common and costly natural disasters in the United States, but only one third of U.S. properties in the riskiest areas for flooding are insured, according to the Federal Emergency Management Agency. Without proper flood insurance, families and businesses are not able to protect themselves from the potential financial devastation that can result from storms.
“Insurers want to help consumers understand their potential risks as well as the options available to reduce gaps in coverage,” said Passmore. “Reaching out to your agent or company to talk through and update 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 identify any gaps in coverage and determine the right amount of coverage for your home and auto policies.
2. 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.
3. 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.
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.