New year, new insurance: Benefits of reviewing insurance policies in January
The beginning of a new year is often a time for reflection and preparation for the upcoming year. That’s why it’s the perfect time to review your insurance policies and start the year with peace of mind and financial protection for you and your family.
Your home, auto and life insurance policies protect your assets and family. For example, if you are married with young children, your home and life insurance policies should cover your mortgage and provide for your family.
The benefits of reviewing your insurance policies in January include the following:
- Knowing the coverages and deductibles currently in place
- Looking ahead to the new year and anticipating new insurance needs
- Planning a home remodel or move
- Changing coverages, limits, and deductibles to reflect new needs
- Looking for additional discounts that you may now be eligible to receive
- Peace of mind that your assets and family are protected
Tips for reviewing insurance policies in the New Year
Insurance policies can be confusing, and knowing which coverages need adding or increasing can be challenging. We have some tips to help you consider any changes needed for next year when you review your insurance policies.
Let’s explore the best ways to review and update your insurance policies for the coming year.
Review insurance policy documents
January is an excellent time to look at all your insurance policies because your needs may change significantly from year to year. Look closely at your coverages, limits and deductibles to ensure they still meet your needs.
Make sure everything looks correct, from the dwelling coverage on your home insurance policy to the average annual mileage on your car insurance policy. Make notes of anything that looks like it needs adjusting, that you no longer need, or that you currently lack but now require.
Explore coverage options and compare quotes
Major life events, like getting married, moving or having a child, may change your coverage needs. For example, if your car is older or your home value increases, you’ll need to adjust limits to more accurately reflect costs.
Additionally, increased weather events in your area can require extra coverage, such as windstorm and flood insurance. Areas that may have previously not needed additional coverage may now need insurance due to changes in the weather patterns.
"If you own a home, [we] suggest adding risk reduction improvements on your New Year’s resolution list. Insurers have added new coverage limits and exclusionsItems that are specifically denied coverage under the terms of an insurance policy. For example, most auto insurance policies exclude coverage for normal wear and tear, drag racing and intentional acts. related to water, smoke, and wind damage. Extreme weather events are happening more often, and if you’ve increased your deductibleThe deductible is the amount you pay out of pocket for a covered loss when you file a claim. to keep coverage affordable, you’re carrying more uninsured risk. Take steps to prevent damage as best you can,” said Emily Rogan, senior program officer at United Policyholders in San Francisco.
Take a look at the notes you made in step one, and prepare to compare options for filling any gaps in your coverage.
Once you determine your needs, shop around. Since each insurer creates its rate formula, premiums may vary significantly from company to company. Compare quotes from multiple insurers to find the best deal.
Look for premium changes
Your premiumThe payment required for an insurance policy to remain in force. Auto insurance premiums are quoted for either 6-month or annual policy periods. may have gone up in the last year. Traffic violations, moving, getting a new car, adding a teen driver and severe weather can all increase rates. If your rate has increased, speak with your insurer to see why and if there are ways to counter the increase.
Both homeowners and auto insurance rates have increased nationwide due to severe weather, inflation and the rising cost of repairing technologically advanced cars. If your insurance company tells you that the increase wasn’t specific to you, look to other ways to save.
Review and update your life insurance beneficiaries
If you’ve had a significant life change, such as getting married, divorced, or having a child, you may need to update your life insurance beneficiaries. While some policies only require the beneficiary's name and relationship to you, others may require a mailing address, phone number, and other personal information.
If you’re not making changes, touch base with your current beneficiaries to ensure they’re aware of the policy and know how to file a claimAn insurance claim is a request you make to your insurance company for coverage after your car is damaged or you have an accident. You can file a claim online, by phone, or in writing. if necessary.
Look for additional discounts
In the new year, you may be eligible for additional discounts. Insurers offer numerous discounts, and you can save if you’ve gotten married, remodeled your home, bought a less expensive home or car, or can pay in full for your policy. Additionally, traffic violations only stay on your driving record for about three years, and you may be eligible for a discount when your record clears.
Here are some other discounts you can ask about on your auto insurance:
- Paperless billing
- EFT/automatic payments
- Good student
- Occupational or military discounts
- Driver education
Don’t forget to ask about home insurance discounts, too.
Consult with an insurance agent or broker
An insurance agent or broker can offer insight into your insurance needs and suggest additional coverages and discounts you may need to know. Since they typically don’t work with a single insurer, they can give unbiased advice to ensure your assets and family are fully protected.
If your insurance needs are complex, speaking with an expert is a smart move. An agent or broker can also help you find cheaper rates and shop around on your behalf.
Consider bundling policies
Most insurers offer a significant discount if you bundle insurance policies. For example, if you have home and auto coverage, consider bundling them with the same carrier to get a discount. However, research is needed to ensure that individual policies with different insurers aren’t cheaper.
The average auto and home bundling discount is 15% a year, so the savings may be significant.
Plan for seasonal changes
Remember to consider insurance for items that you may not use year-round. For example, if you have a boat, RV or travel trailer, or motorcycle used only in the summer, you may carry limited coverage during the winter to lower rates.
Most companies will allow you to put these vehicles on an in-storage, comprehensive-only policy, but some companies offer a year-round price based on the knowledge you won’t use them all year. Check with your insurance company to find out what’s available.
How do life changes impact my insurance needs?
When determining insurance needs, consider any life changes coming your way. If you have or adopt a child, get married or divorced, move or have a new teen driver, your insurance needs can change significantly.
Increasing or adjusting auto, home, and life insurance coverages may be necessary. You may need to add a driver to your auto insurance, change home coverage if you’ve moved, and increase life insurance to prepare for a new child.
January is a perfect time to reflect on last year's changes and anticipate any changes for the new year.
How do you know if your deductibles and coverage limits are appropriate?
Consider your financial situation to determine if your deductibles and coverage limits are correct. High deductibles mean lower insurance rates, but you must pay more out of pocket if you file a claim. Additionally, lower coverage limits equal lower rates, but coverage may only pay for some damages, again leaving you with high out-of-pocket costs.
To find the best balance, carefully consider how much you can afford for insurance and if you can save money to cover repairs.
FAQ
What should I look for in my policy documents during a review?
Look at coverages and deductibles for each policy on your declarations page. Ensure you have enough coverage if your car or home is a total loss or if you have life changes coming up, such as having a baby. Additionally, check your deductible amount. If you’re able to raise deductibles, your premium decreases.
How often should I review my insurance policies?
Experts recommend reviewing insurance policies at least once a year. Life changes, such as adding a teen driver or retiring, often affect insurance needs. January is an excellent time to review policies and plan out your year.
Can reviewing my policies help me save money?
It’s essential to review your policies to see if your needs have changed. For example, if you bought a cheaper car or moved to a different area, you may be able to lower coverage. You may also be eligible for additional discounts.
What can I do if my insurance premiums have gone up this year?
First, speak with your agent to determine why rates have increased. For example, your rates may have increased if you were in a car accident or bought a new home. Next, find out if there is anything you can do to mitigate the increase, such as taking a defensive driving course or adjusting coverage. Finally, shop around for insurance. Other insurers may charge lower rates for the same coverage.
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