YOUR ANNUAL INSURANCE CHECK-UP:
Five Questions to Ask Your Agent About the Insurance on Your Home

Without looking, what is the value of the contents of your home covered by insurance? Is a flood covered? If someone is hurt while visiting, will insurance pay medical expenses? Whether a renter or an owner, the Arkansas Insurance Department suggests a review of all insurance policies annually. It is a chance to brush up on what is covered, and to evaluate whether the coverage is still adequate (or too much) for your current situation.

When reviewing your policy, find the answers to these three questions:

1. What type of coverage do I have?

Homeowners or Renter’s.  A homeowners insurance policy covers the structure, belongings and legal obligations if someone is injured at your home. A renter’s policy does not insure the structure, but otherwise provides similar coverage. To review a list of coverages that are in a typical homeowners or renter's policy, visit the National Assoication of Insurance Commissioners (NAIC) website, www.InsureUonline.org, select the appropriate life situation on the right, then click on the "Home" tab.

Replacement Values.  Check the type of replacement value provided in the policy. Actual cash value (ACV) is the amount it would take to repair damage to a home or to replace its contents after allowing for depreciation. Replacement cost is the amount it would take to rebuild or replace a home and its contents with similar quality materials or goods, without deducting for depreciation. Click here to learn more about how the difference between replacement cost and ACV could affect a claims payout.

Liability Limits.  Liability insurance protects you from legal obligations arising from accidents involving visiting non-residents. With a few exceptions, such as auto or boating accidents, all-purpose liability coverage follows wherever you go. An umbrella policy can extend the liability limits of a homeowners or renter’s policy if the policy limit is insufficient.

Medical payments.  Homeowners and renter's polices typically include limited medical expense payments for injuries occurring on your premises to visiting non-residents. It may also cover medical expenses of another individual injured by you, a member of your family or a family pet while away from the home.

2. How much coverage do I need?

Make a home inventory.  A home inventory is the best way to determine the appropriate level of coverage needed for contents. It is also a useful tool to have in case of a loss. When doing the home inventory, make sure to include as much detail as possible about the items. Click here for a home inventory checklist.

3. What are my deductibles and discounts?

Save money on homeowners or renter’s insurance.  Deductibles and discounts are generally the easiest places to save money on this type of policy. Most companies offer discounts for people who have more than one type of insurance policy with them, and for people who have had few claims or are long-term customers. When it comes to the deductible – which is the amount you have to pay if there is a loss – usually the higher it is, the lower the premium. It's normal to consider raising a deductible to save on premium, but remember, the bill will be that much more following a claim.

After reviewing the policy, call your agent or insurance company and ask these five questions:

1. Is the coverage on my home and its contents adequate? Is it too much?

The home inventory will help this. If you have any special items like art, jewelry, memorabilia or collections (such as stamps or coins), mention that, too. These items may require special coverage. And, running a small business at home will affect the premium, so mention that.

2. Is my premium as low as I can expect it to be? Are there additional discounts available? Can /Should I raise my deductible? What about mitigating against damage from local threats?

Mitigation – or taking steps to reduce a potential loss before it happens – can help limit your home's exposure to certain local risks (such as wildfire or hurricane). Ask if there are risk mitigation programs and discounts available.

3. Are there any losses – like flood or earthquake – I need to worry about that are not covered in my current policy?

Neither flood nor earthquake are covered by a standard homeowners or renter’s policy. There are optional insurance policies for both disasters. Ask about available options or visit www.Floodsmart.gov for details on flood insurance.

4. Would my long-term financial health benefit from an umbrella policy?

An umbrella policy provides excess liability limits and possibly other additional coverages above a homeowners or renter's policy. For example, an umbrella policy can extend the liability to $1 million or more above the $250,000 limit of liability that might be in a basic homeowners policy. As your asset portfolio grows, your insurance company or agent may suggest an umbrella policy for better protection.

5. Has anything changed in my coverage in the last year?

Insurers may change policy terms at renewal, but they must notify you first. Read all notices and information sent from the insurance company. When talking with the agent, ask if there are any anticipated changes when the policy renews.

More Information

If you have questions or are confused about your insurance coverage, contact the Arkansas Insurance Department Consumer Services Division at (800) 852-5494 or (501) 371-2640. 

Get smart about your insurance needs! More information about auto, home, life and health insurance options — as well as tips for choosing the coverage that is right for you and your family — is located on the NAIC Web site, www.InsureUonline.org.

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