Time to Review Your Insurance Policies

By Deborah Jeanne Sergeant

Perhaps you have worked with the same auto and homeowner’s insurance for most of your adult life. Maybe those policies are tucked away in your desk and you only look at them when it is time to renew — or not at all.

Regardless, it’s important to periodically review your home and auto policies to ensure accuracy and optimal savings.

“It’s critically important to periodically review your insurance policies to ensure that your exposures have not changed, creating gaps in coverage, and the potential for unnecessary financial risk,” said Kimberly Allen, agency development manager and New York state insurance broker with Eastern Shore Associates Insurance Agency, based in Fulton. “It’s also important to review property valuations, vehicle and equipment schedules, and liability limits for adequate coverage in the event of a loss or claim.”

Eastern Shore also maintains offices in Syracuse, Pulaski, Rochester, Camden, Walworth and Waterloo.

Although many older adults develop loyalty to their insurance company, much may change in 20, 10 or even five years. A bevy of life changes can affect how much coverage is needed to remain adequately insured; other changes can waste money on unnecessary coverage.

“Our needs change as we age,” said Dave Manley, principal agent and vice president of The Insurance Place Agency in Oswego, and Fulton. “The insurance needs of a 16-year-old are different than someone in their 20s, 30s, 40s, and 50s. It’s important to review the policies to make sure they’re adapting to your changing lifestyle.”

When you first applied for insurance, you may have been in an entirely different financial situation than you are now. That is why it is wise to review the deductibles. Manley said that for pennies a day, a driver can obtain adequate liability insurance for a loss that could otherwise wipe out their life savings.

“People are conditioned to call around and get the cheapest insurance they can at 16,” Manley said.

Continuing that habit through the decades can result in being underinsured. Manley said that agents selling on price alone with lower limits “protect only themselves by capping losses instead of looking at the best interests of the client. Their assets are at risk.”

He also encourages clients to get uninsured motorist insurance.

If it has really been a long time since you peeked at your policy, you may have age-related discounts you have been missing. Although these are usually applied automatically, make sure that you get it. Some companies offer a lower rate for retirees if you ask for a pleasure rate instead of a commuter rate owing to the fewer miles you plan to drive. (If you plan to do a road trip across the U.S. once you retire, you will not qualify.)

Now that the kids are grown and gone, perhaps you can better afford to pay the policy in full rather than month-to-month. Also, make sure you remove any children who no longer need to be on your policy.

To lower the auto insurance rate, take a driver’s safety course. Available online, the course costs only $40 and its completion qualifies drivers to receive a 10% discount for three years.

If you have different companies for auto and homeowner’s insurance, look at bundling them, which often garners savings.

Many policyholders do not know about equipment breakdown endorsements. This coverage replaces things like air conditioning units, freezers, electric panels and electronics in case of an electrical or mechanical failure, even after the warranty on each item has expired. Costing only $25 to $50 annually for $50,000 of coverage, equipment breakdown endorsements usually have a $250 to $500 deductible. If you lost numerous items at once through a power surge, for example, that would count as once incident.

Homeowners should also make sure that their coverage keeps pace with their home’s value. If the fixer-upper has seen upgrades through the years, the policy should stay current with replacement cost, not its original price.

“The biggest shame of it is when someone realizes that for an extra $200 year, they could have had all the coverage they need,” Manley said.

One example is sewer and drain backup coverage, which costs about $30 a year. Paying a firm to remediate this type of damage costs thousands of dollars.

Manley said that many renters do not understand that the landlord carries insurance on only the structure but not their renters’ belongings, liability, or if they are abruptly displaced and need a different place to live. That includes senior apartments and communities, common steps in downsizing.

“A lot of people sell their homes and have never rented and they don’t think about what may happen,” Manley said. “Having the proper insurance will make a difference between having a bad moment in your life and having it become a life-altering change.”