Written by: Emmet Pierce
As you spruce up your home during your annual spring cleaning ritual, don’t forget to dust off your insurance policies.
It’s worth taking the time to put your auto, health, home and life insurance plans in order. As life circumstances change, so do insurance needs. For example, you may need to buy more life insurance because of a growing family. Or perhaps there’s a new driver in your household to add to your car insurance policy.
Here are four tips for making sure your insurance is as neat and tidy as your home.
1. Wash and wax your car insurance policy.
Check to see whether your car insurance needs a tune-up, says Ron Moore, a senior product manager at MetLife Auto & Home. He suggests making sure your collision and comprehensive cover fits your needs.
A collision policy pays to fix your own vehicle after a crash, while comprehensive pays for damage not caused by collisions. A comprehensive policy covers losses from such things as theft, fire, vandalism or storms.
Having collision and comprehensive policies is important if you drive a newer vehicle that would be costly to replace or repair, Moore says. However, if the cost of repair exceeds the vehicle’s value, you may be better off without the coverage. If your aging car is totaled, he says, your insurer won’t pay more than its current worth.
While checking your car insurance, make sure you get all the discounts you’re entitled to. If you have a teen driver on your policy, he or she may qualify for a good-student discount. If your teen is going away to college and won’t be using your car during the school year, you may qualify for a premium reduction.
2. nbsp; Give your health policy a check-up.
Martin Rosen, co-founder of Health Advocate Inc., a Pennsylvania company that helps people navigate the health care system, says it’s common to overinsure for health, whether you have an individual policy or an employee-sponsored plan.
“Some people have a tendency to think, ‘It is a health insurance policy, I want the best,’” he says. “That often translates into the most expensive.”
You may be paying too much if you choose a policy with a low deductible, he says. Low deductibles are good if you frequently need medical care. However, if you’re young and healthy, it may be wiser to choose a high deductible, such as $2,000. That way, he says, you’re covered for catastrophic illnesses without paying high insurance premiums.
If you have a serious medical condition, you may want a health insurance plan that gives you several options for care, even if it costs more. You may not want to keep a plan that restricts you to doctors within a single health care system or requires referrals to see specialists.
3. Brush cobwebs off your homeowner’s policy.
When updating your homeowner’s policy, Moore says, the first thing to do is make sure you’ll have enough insurance to replace your home if it’s badly damaged. Replacement value is not the same as the market value, which can fluctuate greatly. You’ll need enough money to pay for the labor and the materials needed to restore your home to its former condition.
Insurance agents or local contractors may be able to help you determine your home’s replacement cost. Also, several websites can help you estimate the cost.
Moore also suggests creating an updated inventory of home possessions. That way you’ll be able to give an accurate account of what was lost in a fire, natural disaster or burglary. If you’ve acquired valuables that exceed your home policy limits – such as paintings, jewelry or collectibles – ask your agent about adding a rider.
Tully Lehman, a spokesman for the nonprofit Insurance Information Network of California, says one way to cut home insurance costs is to “bundle” your home and car insurance coverage with one insurer.
4. Polish your life insurance.
Cindy Gentry, chair-elect of the nonprofit Life and Health Insurance Foundation for Education (LIFE), says updating life insurance beneficiaries is important. For example, if you’ve divorced, you may need to remove an ex-spouse from your policy.
If you have term life insurance – with a guaranteed annual premium for the duration of the policy – make sure you’re aware of when the term ends, so you’ll have time to shop for another policy if necessary, says Brian Ashe, treasurer of LIFE. Otherwise, you could face a major premium hike.
Moore suggests making sure the amount of your life insurance policy is appropriate. Not everyone views life insurance as a way to leave large gifts to heirs or charitable organizations, he says. “Some people want just enough to cover burial expenses,” Moore says.