When was last time you evaluated your insurance policy? I mean seriously evaluate it. Not just question your premium if it happens to go up. Do you file your annual policy statements without a glance? I mean you didn’t ask for any changes so why look right? Wrong. Do you know for sure what coverage you have? Do you have the riders you need? When was the last time you evaluated your deductible? Most of us probably have scary answers to those questions. Below is a 30 minute guide to do an insurance check up. (I tested this on my policies then also asked some of my owners to participate to be sure my claim of 30 minutes was correct.) First, grab a notebook and label it Insurance Action Items at the top then grab your policy statements.
What type of policy is it?
If you are renting out SFR, first be sure your policy is a dwelling policy (also called tenant dwelling policy). A homeowner’s policy will be invalidated if there is ever a claim and the insurance company finds out you were using it as a rental property.
Evaluate your deductible.
Do you even remember what deductible you picked when you signed up for the insurance? When you see the deductible is your reaction relief or terror? If it’s terror or nervousness write “talk to agent about deductible” on your action list. Remember a high deductible means decreased payments but it’s not worth if the number makes you nauseous. Regardless of how you feel, do you have your deductible money in liquid form at this moment? If you don’t that might be a sign you need a different deductible as well.
Check your policy declaration page.
Check if you have the policy riders that best suit your needs. Do you have riders that seem obsolete? Sometimes insurance companies send you updates on your policy and give you a certain number of days to waive the new riders they are adding. If you failed to waive it, it was added to your policy. Below is a basic list of riders:
Terrorism (an owner’s choice)
Errors & Omissions (this may be useful for if you do your own leasing and bookkeeping)
If you have any riders that seem odd or are missing ones one listed above add “talk about riders” to your action list with the specific riders that concern you.
What is your liability limit?
I’m not talking about the maximum you can be held responsible for if you are sued. What is the maximum your policy will cover on a claim if someone sues you for personal injury from your negligence (I.e. slip/fall). If it seems low, write it on your Insurance Action List. Your agent will have their pulse on lawsuits and where settlements and payouts typically fall nowadays.
Is it an umbrella policy?
If you have multiple properties you should consider having an umbrella policy that would help insulate your personal assets from liability claims that exceed your policy.
Check your property damage declaration.
This is probably the most important step to take given some recent events in Wisconsin. When Beaver Dam’s apartment complex went up in flames from illegal tenant activity the insurance company wasn’t very willing to pay out…and last I knew refused to pay out. Does your insurance policy kick in if a tenant damages your property while conducting illegal activity out of it? What if there is property damage and a housing code violation is discovered during inspection by law enforcement or adjustor? Are you still covered? Answers to these questions will involve a phone call or email to your agent. But it’s important phone call to make to be sure you aren’t caught in the dark when something happens and were expecting coverage.
There. In 30 minutes you have familiarized yourself with your insurance policy. It is possible you have more questions than you did before, but that is a good thing. Now take those questions to your agent. Bring specific questions to make sure you get the answers you desire and to keep the conversation on track.