Whenever you move home you will obviously have to adjust your insurance, but this task is required far more frequently than this too. Whenever the value of your home changes it is important to make changes to your insurance policies too because otherwise you may not be covered as you expect to be. Being improperly insured when you are in need of your insurance can be devastating so it is important to follow this guide on how to ensure your home insurance is correct.
Large Purchases
When you make a large purchase you will necessarily be adding value into your home and this needs to be considered in terms of your insurance too. A new TV or even new furniture can add thousands of dollars in value to your home and this needs to be accounted for in your insurance. If these purchases are unaccounted for then your insurance simply will not cover them and you can be sure that you will not receive the payments to replace these items.
Gifts
Gifts are rarely something that you would consider when insuring your home, but the added value of an Xbox or PlayStation can actually make a significant impact. New phones and jewellery also hold significant value that can be and should be added to your insurance policy to ensure that you are properly covered.
Depreciation
As well as adding value to your home you can also see value be reduced. It is also important to reduce the value of your insurance when necessary because being over insured is classed as misrepresentation of your property and you can be penalised for this. Over time the value of items within your possession will decrease and this needs to be reflected. A $12,000 furniture suite, for example, may only be worth $3,000 after four years of ownership and wear. Reflecting the depreciation of value in this manner is essential because you will find yourself over insured if you do not.
Renovations
Renovations can add significant value to your home and it is important to reflect this too. If you spend $10,000 renovating your kitchen, for example, then you will need to assess how this affects the property value. Whilst this may only add $5,000 to the overall value, this is an amount that must be accounted for. Any renovations that you make will result in a need for a reassessment of the value of your home.
When to Adjust Value
Knowing when to adjust the value of your insurance policy is difficult, but it will depend on your treatment of the home and on your level of investments too. Whenever you make a significant expense relating to your home it is wise to assess the value and see if any real changes have occurred. You should also, however, make a point of assessing the value of your home every six months so that you can be sure to pick up on any significant changes and reflect them appropriately in your policy. Being incorrectly insured will not matter until you need to make a claim, but by that point it is far too late to rectify any discrepancies.
