Things to Check During an Annual Insurance Review
Fri Dec 30 2022
As we look toward the new year, it is exciting to think of all the new possibilities and changes that will be coming our way. It is often easy to overlook the little changes and progressions that have happened over the last year. By reviewing your insurance, you can make sure you catch any gaps in your coverage based on changes that have happened recently. An annual review is a great way to stay on top of your insurance and ensure that you are properly protected against things that are yet to come. Here are some key areas to bring up during your insurance review.
Depreciation on Your Vehicles
Even if your car is running smoothly, it still loses value as time goes on. When you first got insured for your new vehicle, the car was likely worth more than it is today. You may have even had a loan on the car to finance the cost of the purchase. As months and years go by, the vehicle will experience what is called depreciation, where the value of the vehicle goes down. For insurance purposes, depreciation is used to calculate how much it would cost to replace your vehicle, which in turn determines how much coverage you will have in the event of a loss.
When reviewing depreciation, you will want to examine two main coverage items: comprehensive and collision. These are coverages specifically for your vehicle in the event of damage to the car. Comprehensive is for incidents that are not related to an auto accident, such as a tree branch falling on the car or a burglar breaking the windows. Collision, on the other hand, is related to accidents while behind the wheel, such as rear-ending another driver or backing into the garage door. The age of your vehicle can be a huge factor when deciding what deductibles to carry for comprehensive and collision, as well as the need to carry this coverage at all. By discussing this with your insurance agent, you can determine what coverage is necessary and desired for your vehicle in the event of an accident.
Paying Off an Auto Loan or Mortgage
Loan payoffs are very exciting because they often take at least a few years to achieve. Despite the excitement, this is a milestone we often forget to share with our insurance company. When you have an auto loan or mortgage, the lender is listed on the insurance policy to ensure that they can be compensated if the car is totaled or the house burns down. While it is unlikely that your lender will argue the semantics of the payoff in the event of a loss, it is still a good idea to remove them once the loan is paid off to avoid any confusion or issues after an accident. The status of ownership doesn’t necessarily affect your insurance rates, but it can be a key detail to help your insurance company handle insurance claims without pulling in unnecessary third parties.
Additionally, lenders require proof of insurance with certain limits, especially for vehicles. Once you pay off a car, you no longer are required to meet their requirements by carrying specific coverage. This allows you to make the adjustments you need to protect the vehicle and yourself while considering your budget more thoroughly. Now that the vehicle or home is paid off, the insurance company is no longer required to send proof of insurance to the third-party, so this is a nice step to take to avoid unnecessary documents from circulating once the property is paid off.
Changes in Assets on Your Umbrella Policy
Your assets may change year to year, which means the liability exposure you have is greater. Insurance is inherently designed to protect you in the event you damage someone’s property or cause harm to someone else during an accident. If you have a new beachfront property or a recent promotion with a pay raise, you may want to reevaluate your potential exposure in a liability claim. In the event of a lawsuit, you want to have enough insurance to protect the potential damage as well as the assets you have. If your insurance isn’t enough, then the injured person or property owner may come after you individually. This would mean liquidating property in order to cover the outstanding costs incurred by the victim, and in some cases can put your income at risk.
Rather than taking the chance, it is important to review your assets and financial situation year to year and make the necessary adjustments to your insurance coverage to fully protect yourself. An Umbrella policy is an excellent way to obtain the coverage needed. This additional policy provides liability coverage above and beyond your auto and home policies in amounts of $1 million or more depending on your individual situation. If you do not already have an Umbrella policy, it is a good idea to review this option with your insurance agent to see how it can close the gap on your potential liability exposure.
Verify Life Insurance Beneficiaries
Relationships tend to fluctuate over the years, so many people will come and go from our lives. We like to think that our loved ones will stay constant for us, but with separations, health problems, or sudden accidents, life can change very quickly. Life insurance is set up to pay money to the individuals you have named on your policy as beneficiaries. The beneficiaries will receive a stated percentage of the total policy value when you pass away. It is wise to review your beneficiaries annually to make sure you have the right people listed on your policy based on your current relationship status with your loved ones and close friends.
Schedule Your Annual Insurance Review
There is a lot to cover as life changes, and that’s why we are here to help. Our insurance agents are available to provide complimentary insurance reviews for established clients and newcomers to the Nicholson family. Call your local office today to schedule an insurance review and get peace of mind knowing you are protected for the year to come.