DES PLAINES, Ill. – Jan. 14, 2014 – According to the Property Casualty Insurers Association of America (PCI), both homeowners and commercial insurance policy holders should review their policies at least once per year – and now is a good time to do it.
“We encourage homeowners, renters, and businesses to start with a yearly review of their insurance policies,” says Micaela Isler, assistant vice president for PCI.
Over the course of a year, an individual or business may have added upgrades, completed renovations or purchased new items that impact the amount of insurance coverage they needed. Conducting an annual review helps ensure that a home or business is fully protected.
1. Begin the process by doing a home inventory of possessions. An insurer may have tools that help, and the can also offer guidance.
2. An insurance agent or company can offer coverage options, assist in determining the best type of policy and offer advice on the proper amount of coverage.
3. Check whether the policy pays replacement cost or actual cash value for a covered loss. Actual cash value takes depreciation into account. As a result, the compensation received for actual cash value may be much lower than the retail price of a new item.
In most cases, the preferable policy insures a structure for the full replacement cost. The replacement cost is the amount necessary to rebuild the home with construction materials of like kind and quality.
Replacement cost should not be confused with market value, however, which is the price a home would sell for today. In some areas, new building codes increase the cost of rebuilding.
4. While flood insurance costs have become a hot button issue, it’s still a good idea, in general, to consider it because flooding is the most common natural disaster. Flooding is not covered in standard homeowners insurance policies, but it can be purchased through insurance agents from the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Administration. In a few cases, private companies offer flood insurance coverage.
5. Know the amount of deductibles. The deductible is the amount of a covered loss that the homeowner must pay. The higher the deductible, the lower the premium. But the higher the deductible, the more a homeowner must pay if an event occurs that requires an insurance claim.
6. Ask about discounts. Some coverage offers a discount for things such as security systems, smoke alarms and steps taken to mitigate damage from natural disasters. Some insurers offer discounts for consumers who purchase multiple policies.
1. Don’t assume insurance needs haven’t changed.
2. Consider what it would cost to replace your building – that figure can change significantly over time. Also consider new, moved or closed locations.
3. Think about changes in your employee headcount and the work performed. The use of subcontractors or having employees work from home on a regular basis could have ramifications on workers compensation insurance.
4. Talk to an agent or insurance company about additional coverage options, such as loss of business income due to natural disaster or coverage for a data security breach. Each business is unique and an agent or insurance company can help determine the right package of coverage.
© 2014 Florida Realtors®