(BPT) - The beginning of a new year is a time when many people take stock of their lives, addressing important tasks like getting wellness exams or scheduling home maintenance. To help protect your home and property, these two steps should be at the top of your list: Getting an annual insurance check, and taking a home inventory. These steps can help you have peace of mind that you've got the coverage you need, should the unthinkable happen.
Here's why it's so important to do these tasks on an annual basis, from the experts at State Farm Insurance.
Annual insurance checks
Scheduling an annual insurance conversation with your insurance agent gives you the opportunity to ask questions about your home coverage, as well as ensure that all your vehicles are adequately covered - and new drivers are added to your coverage.
During your annual check, your agent can help you estimate the replacement cost of your home. While the amount of coverage you select is ultimately your choice, your agent can explain your options so you'll make an informed decision based on the amount of coverage to rebuild if necessary. This is also a good time to ensure that you've told your agent about changes to your home that may impact your coverage needs, such as additions or remodeling.
It's critical to understand the difference between the market value of your home and the replacement cost:
- Market value: the amount a buyer would pay for your home, including the land, regardless of how much it would cost to rebuild the home.
- Replacement cost: the rebuilding cost necessary to replace your entire home.
Insurance agents recommend purchasing an amount of coverage at least equal to the estimated replacement cost, but the choice is yours. To determine the most accurate current replacement cost for your home, you could ask if a replacement cost estimate is available during a home appraisal, or consult a local builders association or reputable builder for an estimate. Building contractors or professional replacement cost appraisers are good sources for determining the estimated replacement cost of your home.
When you upgrade or improve your home, you may need to increase your home's estimated replacement cost, which is another good reason to reevaluate this regularly. Replacement cost estimates are also influenced by labor and materials costs that are subject to change, so keeping up with the current market conditions in your area and changing your home insurance coverage amount accordingly will help you maintain coverage that's at least equal to 100% of your estimated replacement cost.
Since it's impossible to predict what the exact cost will be to replace your home in the future, assessing this amount annually means you'll be more likely to have enough coverage to account for unforeseen circumstances.
Why a home inventory is crucial
Before scheduling your annual insurance check, take a complete home inventory so your records are up to date. It's easy to be unaware of how many belongings accumulate in your home over time, which is why it's key for homeowners to conduct a home and personal property inventory before a catastrophe or unexpected damage might occur. A home inventory is an excellent way to make sure you will be able to replace things in your home including furniture, home essentials, clothing and more.
Whether you live in an apartment or a house, a home inventory is an excellent way to help you make the best homeowners or renters insurance decisions. This will also expedite insurance claims in the event of theft, damage or loss. While it may sound daunting, there are three ways to make your inventory, so choose the method that seems easiest to you.
- Written inventory: List your belongings, including item descriptions (make, model and serial number, if applicable), value and purchase date. Create your list using a spreadsheet, or fill out a home inventory checklist that's ready to go, like a checklist from State Farm Insurance. Gather documents like receipts or photos that support your inventory.
- Digital inventory: If you have a smart phone, there are downloadable apps, some of them free, to help you make a digital inventory. Home inventory apps let you record a photo of each item along with its description, value and purchase date.
- Visual record: You can use a visual record of your possessions to show proof of ownership with a video walk-through of your home, or through a series of photographs.
Another option is combining a couple of these methods, if that works best for you. Making an accurate, up-to-date record of your insurable assets will help you determine the right amount of insurance coverage you need.
For additional tips and to help you get started, check out the blog "How to Create a Home Inventory" at StateFarm.com/simple-insights.
This content sponsored by State Farm