Reviewing your homeowners insurance

Why You Should Review Your Homeowners Insurance Policy

If you are a homeowner, you probably have a home insurance policy in place. While it is important to pay your home insurance premiums on time and lenders require that homeowners have a policy in place, you’ll want to review your current home insurance policy periodically. While looking through the paperwork might seem like a daunting task, it’s the best way to ensure that your policy is still adequate for your needs.

Do You Have the Right Type of Homeowners Insurance?

Not all homeowners insurance policies are created equal. Among the policies that you can choose from are HO-1, HO-2 and HO-3. The HO-3 policy is the most common type of insurance and offers the broadest coverage. Your insurance type should be listed on your policy paperwork. If you are not sure what you have and would like to be sure you have an HO-3 policy in place, give your agent a call to check your status and to see if you can qualify for any special rates or discounts.

If you put down less than 20% on the value of your home at purchase, you may still be paying private mortgage insurance (PMI). This type of insurance protects your lender if you are unable to continue paying for your home. Some lenders allow the homeowner to stop paying PMI at a certain point in the life of their loan. Check with your lender to see if you are able to remove PMI from your payments now or at any point in the future.

You’d Better Shop Around

Many homeowners bundle their home insurance together with their auto insurance. Rather than assuming that you are getting the best rate by combining policies — or that you are receiving discounted premiums because you have been a loyal customer of your insurance company for many years — it definitely pays to shop around. Your home is one of your largest and most important purchases, so you should be choosy about who you select to insure it. has ranked a number of large home insurance companies; you can check their chart as well as use home insurance quote providers to see what you might pay at different companies for the same coverage. Also consider checking online reviews to make sure you have selected a reputable and reliable insurance carrier. If you’re frustrated or overwhelmed with the process of finding a new insurance company, don’t worry! Desert Financial Insurance Services will help you shop around for the home insurance policy that best fits your needs and your budget.

What Are the Policy Details?

If you are buying homeowners insurance for the first time, make sure you understand the details of the policy prior to signing on the dotted line. The last thing you want is to learn the hard way that your house and belongings are not completely covered. As the National Association of Insurance Commissioners notes, you should regularly review your coverage limits, including whether your insurance company will pay for damage to any structures that are attached to your home — such as sheds, free standing garages and personal property. Also, if you have some money in savings and feel you could swing a higher deductible — for instance, a $1,000 out-of-pocket deductible instead of $500 — you’ll pay a lower monthly premium.

What Is the Replacement Cost?

Most standard home insurance policies offer a home replacement cost option. As its name implies, replacement cost is the dollar amount that is necessary to repair or replace your entire home. However, because replacement costs can change over time, you should be sure that the maximum amount in the policy is enough to cover the loss of your home, should there be a fire or other peril that damages it.

Inflation can impact the cost of building materials, labor and contractor costs. For example, a home that could have been rebuilt for $150,000 ten years ago would cost significantly more to replace now. Review your home replacement costs with your agent, or hire a building contractor to provide you with a detailed estimate, and then adjust your policy accordingly.

We’re Here to Help

Whether you bundle your home insurance together with other insurance or you have a separate insurance carrier just for your home policy, regularly reviewing your insurance options can help give you peace of mind. If you would like to review your current policy to make sure your home is adequately covered, or if you are a new homeowner shopping for home insurance, contact a Desert Financial Insurance Services advisor today. We can help you review your current coverage and answer any questions that you might have.

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