The family has a new driver behind the wheel. You decide to rent out your coastal home as an Airbnb. You completed a few renovation projects, including a home office and gym. You were invited to volunteer on the homeowners’ association board and are eager to give back. You traded Corporate America for an at-home business.
All of these scenarios are life changes many of our clients have experienced during the last two years. Life’s speed can seem nonstop, but it’s so important to tap the brakes periodically to identify how these changes could create risks that are not currently covered by your insurance policy.
WHAT’S CHANGING IN YOUR WORLD?
Even if life has remained relatively constant, the market and environment around us is fast-evolving and our insurance coverage should reflect that. For instance, property values are up. And the cost of making repairs is greater because of supply chain constraints. Both factors influence what limit is appropriate for home and business policies.
The only way to Be Sure you’re covered is to address change head-on with a risk management plan. Here are some areas to consider.
NOT JUST FOR RAINY DAYS
You insure your home, vehicle, and personal property. But what happens if an accident occurs to any of those and the damages significantly exceed your policy limit? For example, if you have a liability policy of $500,000 but end up with a $1 million claim, you’re responsible for the remainder. With an umbrella policy, you can alleviate the financial burden of large claims because the policy will kick in and cover the excess.
Just because you hold a homeowners’ insurance policy doesn’t mean you can do whatever you want with your home. If you choose to rent it, most insurance will not cover incidents that occur while you are not occupying the property. You might need a different type of insurance policy to allow for rental exposure. And on top of that, it’s a good idea to hold an umbrella policy. Another option is an excess liability policy that acts like an umbrella but covers one specific location.
CELEBRATING AT HOME
Rather than hosting weddings, anniversaries, and other celebrations at venues, many have opted to entertain at home. While venues hold insurance, does your personal policy have the necessary limit to cover any what-ifs that can occur? Hosting a party at home can expose you to a great deal of liability. And let’s face it, everyone is “friends and family” until an accident happens. Risks include alcohol intake, property damage, and food exposures. Special event coverage or an umbrella policy might be in order. The key: discuss event plans with your insurance advisor before the RSVPs roll in, not after a guest complains of food poisoning.
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Now your home is an office, too. Perhaps you’re employed by a business that is giving you the flexibility to work remotely. Or maybe you decided to start your own home-based business. Keep in mind, the standard homeowner’s policy you have in place might not cover your business inventory or equipment acquired to pursue your occupation. For example, if you’re running a baking business from home, you might have commercial-grade appliances that would be costly to replace and exceed limits on your existing policy. Start the conversation with your insurance advisor so you can Be Sure.
Energy-conscious drivers who decided to go electric to beat the prices at the pump should talk to their insurance advisor about rates and policies. Vehicle use and safety rating can impact premiums. Typically, electric vehicles have higher safety ratings. Also, if you use a car for pleasure instead of commuting, you could have reduced road risk, which is also a potential savings. As you consider vehicle purchases or shift driving behaviors (such as no more commuting thanks to that home office), discuss the change with your agent.
‘BE SURE’ CHECKLIST
How has your life changed? Talk to your insurance advisor about events, property, work, and family. You could require more coverage.
- Consider an umbrella policy that will kick in if an incident exceeds policy limits.
- Remember, home-based businesses require different insurance.
- Get an appraisal for your home to ensure that your policy accommodates current, higher values.