How Will I Know When My Coverage Needs Change?

Reading time • 5 minutes

By Matic

Young woman wearing green striped shirt paints a room during a home renovation that would increase her home insurance coverage needs.

Your homeowners insurance coverage isn’t set in stone. While your policy may have felt just right when you first moved in, certain changes to your living situation might require you to adjust your coverage. For example, if you’ve completed a room addition, that will likely increase the value of your home — and your total replacement cost if you ever need to rebuild in the future. You’ll want to contact your insurance company sooner rather than later to help ensure you’re adequately covered.

5 reasons you might need to update your coverage

The goal is to have a homeowners insurance policy that satisfies your lender’s requirements and provides enough coverage for your needs. Below are five scenarios that could lead you to modify your policy.

1. You’re moving to a new home

Your policy details, coverage limits, and insurance premiums are based on your current home. That includes your home’s location, square footage, age, condition and unique risk factors. That means you’ll probably need to take out a new policy if you move. The coverage you’d need for a studio apartment in the city will likely be different than a four-bedroom house in the suburbs. The first step is determining how much insurance you need based on your new home.

2. You’ve made renovations

Making upgrades to your home could affect your insurance needs:

It increases your home’s value: Renovating your kitchen or upgrading your back patio could make your home more valuable, especially if you’re adding to your square footage. The cost of replacing your home if it’s destroyed in a covered event will also increase. That means you’ll need to update your coverage.
It reduces your risk of filing a claim: Certain modifications could lead to lower insurance premiums. If you replace your roof and use higher-quality materials, for example, that could reduce your odds of filing a claim.
It increases your risk of filing a claim: Some home renovations, like adding an office for a home-based business, could increase your risk profile with your insurance carrier. In this example, work-related equipment could be costly to repair or replace.

3. You’ve added security updates

The more secure your home is, the less likely it is that you’ll need to file an insurance claim. According to the Insurance Information Institute, you might be able to modify your policy and reduce your premium if you do any of the following:

Install smoke detectors.
Put in a fire or burglar alarm that can automatically notify the police or fire department.
Add dead-bolt locks to your doors.
Install a sophisticated sprinkler system that can help reduce fire damage.

4. Your personal assets have increased in value

Remember those replacement costs we mentioned earlier? They could go way up if you’ve acquired any high-value assets. That might include jewelry, electronics, appliances, furniture, valuable artwork, and more. If the items inside your home are damaged or destroyed by a covered event, it will cost more to repair or replace them.

5. You’ve added a pool or trampoline

These are known as attractive nuisances, and each one your home has is considered an additional risk. Putting in a pool can increase your home’s value and also create a safety hazard. As such, your insurance company may require you to dial up your coverage. Similarly, adding a trampoline to your backyard could impact your insurance needs — and your insurance company might not cover it at all.

What to do if you need to change your coverage

If you need to update your homeowners insurance coverage, you’ll have options.

Modify your coverage with your existing insurer: You might be comfortable with your current insurance carrier and want to continue on with them. In this case, they can typically either adjust your existing policy to reflect your new coverage needs or draw up a new policy if you’re moving to a new home.
Look for a new insurance carrier: Alternatively, you can gather quotes and shop around for a new insurer. Matic makes this part easy, allowing you to quickly compare policies from top-rated insurance carriers. You’ll want to consider premiums, coverage limits and deductible amounts when making a decision.

How to cancel your previous policy

If you choose to cancel your existing homeowners insurance policy, you’ll need to contact your insurer to notify them. In some cases, they may require a cancellation form. You should receive notice from your insurer when it’s complete. You might also be able to check your policy status by logging into your online account.

If you cancel in the middle of your term, you might have a partial refund coming your way. Just be sure that you have your new policy set up and ready to go to prevent a lapse in coverage. Otherwise, your mortgage company might choose an insurance policy for you, which typically costs more and could result in less robust coverage.

If you’re not sure whether or not you need to change your coverage, reach out to your insurance company for clarification. Leaving it to chance could leave you vulnerable to financial losses if you need to file a claim.