When Should You Update Your Home Insurance?
October 3, 2023
If you’re like most homeowners, then you probably took out a Home Insurance policy back when you first purchased your home, and haven’t given it much more thought since. After all, your Home Insurance isn’t always top-of-mind—at least not when everything’s going smoothly.
But you never know when it might come time to make a claim. If life were to throw you a curveball tomorrow, would your existing coverage be enough to protect your home and all of its contents?
That’s why it’s essential to review your Home Insurance policy on a regular basis, and keep your insurer in the loop whenever things change in your household. If you don’t, you could be missing out on potential savings—or worse, leaving your home and prized possessions underinsured.
To help you out, here’s a list of important scenarios that should prompt you to check in with your broker about updating your Home Insurance policy:
1. Renovations or Home Improvements
Your home replacement cost is one of the most important factors that goes into your Home Insurance policy. In a worst-case scenario, having the right amount of coverage in place will ensure that you’ll have enough funds to rebuild your home from the ground up. That means that any significant changes to your home that might affect its replacement cost should prompt a review of your policy to make sure you’re still fully protected.
If you’re planning to put in a new deck or an extra bedroom, expect your home’s value to increase along with your square footage. Even if you’re just remodelling parts of your home, such as the kitchen or bathroom, that could still result in tens of thousands of dollars added to your home replacement cost. Adding features like a swimming pool or a hot tub comes with increased exposure to liability risks, which could lead to an insurance price hike.
On the other hand, certain types of home improvements could potentially get you a discount on Home Insurance rate—namely, anything intended to reduce the risk of theft, vandalism, and other damages. This includes upgrades such as installing a home security system, updating older electrical, heating, or plumbing systems, and adding a backwater valve, sump pump, or leak detection system.
2. People Moving In or Out
Whether you’re getting married, divorced, welcoming a new baby, taking in an older relative, or emptying the nest, it’s a great time to review and update your Home Insurance policy.
Home Insurance typically includes personal liability coverage for everyone living in your home, which covers accidental property damage or injury caused by any member of your household. If you’re expecting someone to move into or out of your home, be sure to ask your broker how this change in your household could affect your policy; this will help avoid any potential gaps in coverage.
3. Getting a Pet
Believe it or not, humans aren’t the only residents that fall under your Home Insurance coverage! Homeowner’s policies usually extend to liability legal expenses from pet injuries such as dog bites—as long as you’ve notified your insurer in advance. Keep in mind, though: certain dog breeds and exotic pets may be excluded from coverage. So if you’ve recently adopted a pet, make sure to keep your insurer in the loop to avoid any unexpected pitfalls.
4. Renting Out Part of Your Home
Renting out part of your home to a tenant comes with a number of insurance-related implications. More people in one home means more liability risk, since your tenant—and their dependents and guests—could very well injure themselves on your property and sue you. Additionally, your homeowner’s policy won’t cover your tenant’s property, so make sure to get proof of insurance from your tenant to cover any unintentional damages or loss of not only their personal belongings, but also any of your items that may be part of the rental unit (furniture, appliances, decor, etc.).
Keep in mind: Home Insurance policies generally require you to let your insurer know of any significant changes to the use of your property—that includes taking in a tenant (and their dependents) to generate rental income. Be sure to inform your insurance company, or you could risk future claims being denied.
5. Acquiring or Getting Rid of Valuables
While your Home Insurance likely includes content coverage that insures your personal belongings up to a limit, it won’t cover any exceptionally valuable items over a certain dollar amount—usually about $2,000.
If you’ve recently purchased any expensive assets such as fine art, jewellery, antiques, collector’s items, electronics, or even appliances, it may be worth asking your insurer if you need to increase your Home Insurance contents coverage limits. Similarly, if you’ve recently sold an expensive asset—take the time to review your policy in case you no longer need those higher limits. For more personalized advice on your unique situation, connect with your broker.
6. Purchasing a New or Secondary Home
New home, new insurance policy! It might go without saying that you’ll need Home Insurance when you move into a new home—but it’s not always as simple as just transferring your existing policy over. Home Insurance policies (and premiums) vary based on a number of factors, including the size and age of your home, your location, proximity to fire services, crime rates in the area, and more. So if you’re planning to move, you’ll need to look at quotes tailored to your new home. Or, connect with a broker and we’ll do the shopping around on your behalf!
If you’re purchasing a second home without selling your current home, there are some important differences to note when it comes to getting coverage. Rather than a standalone policy, most insurers prefer to offer secondary or seasonal Home Insurance as an add-on to your existing homeowner’s policy. Note that these factors can all impact your policy terms and premium costs: the amount of use your second property is expected to see throughout the year, the value of the home and its contents, and if you’ll be using it as a rental property.
7. Starting a Home-Based Business
Thinking of starting a home-based business? Even if your business is located at home, Home Insurance cannot act as a substitute for business insurance. While some policies may offer limited liability coverage or a small amount of coverage for business-related equipment (like your laptop or cellphone), most specifically exclude business-related damages, activities, assets, inventory, and client property.
Consult with your broker to learn more about the business insurance options available to you as a home-based business owner.
When it comes to your Home Insurance policy, you can’t just “set it and forget it”. To ensure that your insurance coverage keeps up with the changes in your life, don’t forget to review your policy on an annual basis!
Need help finding a home insurance policy that suits your lifestyle? You can count on PROLINK to keep you protected. With more than 40 years of experience and a wide network of over 30 insurers, we know insurance inside and out—and we’ll guide you to the right coverage for your home, from the right insurer, at the right price. Plus, our dedicated advisors are here to answer any insurance questions you might have and offer you personalized guidance for your unique life circumstances.
Connect with PROLINK today to learn more!
PROLINK’s blog posts are general in nature. They do not take into account your personal objectives or financial situation and are not a substitute for professional advice. The specific terms of your policy will always apply. We bear no responsibility for the accuracy, legality, or timeliness of any external content.