What Should You Review in Your Homeowners Insurance Policy Each Year?

When did you last read your homeowners insurance policy?

Many homeowners purchase coverage when they buy the house, pay the renewal every year, and do not look closely at it again.

Meanwhile, the home changes.

Construction costs increase. Improvements are completed. Personal belongings are added. A roof gets older. A detached structure is built. Someone begins working from home. The property may even become a rental.

Your insurance coverage may need to change with it.

I am not an insurance professional, and I cannot tell you what a specific policy covers. I can tell you that discovering a coverage problem after something happens is much worse than asking questions before it does.

Is Your Dwelling Coverage Still Enough?

Your dwelling coverage is intended to help repair or rebuild the home after a covered loss, up to the limits and conditions of the policy.

That amount is not the same as the home’s market value.

Market value includes factors such as land, location, buyer demand, and comparable sales. Replacement cost focuses on what it may cost to rebuild the structure.

Ask your insurance professional:

• How was my dwelling limit calculated?
• Does it reflect current construction costs?
• Have my renovations or additions been included?
• What happens if rebuilding costs exceed the policy limit?
• Do I have extended or guaranteed replacement-cost coverage?
• Are there conditions that could limit that coverage?

If you remodeled the kitchen, finished a basement, added a deck, constructed a shop, or made another significant improvement, tell your insurer.

What Are Your Deductibles?

Do not look only at the annual premium.

Review how much you would need to pay before coverage begins.

A policy may have different deductibles for different losses. Some may be stated as a dollar amount, while others may be calculated as a percentage of the insured value.

Ask:

• What is my standard deductible?
• Do wind, earthquake, wildfire, or other losses have separate deductibles?
• Are any deductibles calculated as a percentage?
• What would that percentage equal in actual dollars?
• Could I comfortably pay that amount after an emergency?

A lower premium may come with a higher deductible or reduced coverage. Make sure you understand the tradeoff.

How Is Water Damage Handled?

Not all water damage is treated the same way.

The source of the water, how suddenly the damage occurred, and whether maintenance was delayed can affect coverage.

Ask your agent:

• How does my policy treat a sudden plumbing leak?
• How does it treat a slow or gradual leak?
• Is sewer or drain backup covered?
• Is sump-pump overflow covered?
• Does the policy contain a separate water-damage limit?
• Is mold covered if it results from a covered water loss?
• What maintenance responsibilities could affect a claim?

Washington’s Office of the Insurance Commissioner has specifically warned homeowners to check for water-damage sublimits. A policy may have a much higher overall limit but place a substantially lower cap on certain water losses.

Are Flood and Earthquake Damage Included?

Do not assume every natural disaster is included in a standard homeowners policy.

Flood insurance and earthquake insurance may require separate policies or additional coverage.

Ask:

• Do I have coverage for flooding from outside the home?
• Would I need a separate flood policy?
• Is earthquake damage covered?
• What is the earthquake deductible?
• Are detached structures, retaining walls, and personal belongings included?
• Would additional living expenses be covered?
• Are landslide, ground movement, or soil settlement treated differently?

The cause of damage matters. Ask your insurance professional to explain how your policy distinguishes between water, earthquake, earth movement, and other events.

What Would Happen If You Could Not Live in the House?

Additional living expense or loss-of-use coverage may help with increased living costs when a covered loss makes the home uninhabitable.

Ask:

• How much additional living expense coverage do I have?
• How long can the coverage continue?
• What expenses may qualify?
• Would it cover temporary housing, additional travel, food, or laundry?
• What documentation would I need?
• What happens if rebuilding takes longer than expected?

This coverage can matter just as much as repairing the structure. A major loss may require you to live somewhere else for months.

Are Your Belongings Covered for Replacement Cost?

Personal-property coverage may not value every item the same way.

Ask whether your belongings are covered for actual cash value or replacement cost.

Actual cash value may account for age and depreciation. Replacement-cost coverage may pay toward replacing an item, subject to the policy’s terms, limits, and claim process.

Also ask whether special limits apply to:

• Jewelry
• Fine art
• Collectibles
• Firearms
• Musical instruments
• Cameras
• Computers
• Tools
• Cash
• Business equipment

High-value items may need appraisals or separate scheduled coverage.

Is Your Liability Coverage Appropriate?

Homeowners insurance may provide liability protection if someone is injured or you are legally responsible for certain damage.

Discuss anything on the property that could increase risk, including:

• A dog
• Swimming pool or spa
• Trampoline
• Play equipment
• Rental activity
• Frequent visitors
• Household employees
• Large or hazardous trees
• A home-based business

Ask whether your current liability limit is appropriate and whether an umbrella policy should be considered.

Do not assume every pet, activity, or business use is automatically covered.

Have You Changed How the Property Is Used?

Your insurer needs accurate information about the property.

Tell your agent if:

• The home is vacant or unoccupied for an extended period
• You begin renting all or part of it
• You operate a business from home
• You add a short-term rental
• Someone moves into or out of the household
• You complete a major renovation
• You add solar panels
• You build a detached garage, shop, or accessory dwelling unit
• You replace the roof, electrical system, plumbing, or heating system

A policy designed for an owner-occupied home may not fit a rental, vacant property, or home with significant business activity.

Create a Home Inventory Before You Need It

Could you list everything you own after a fire, theft, or major water loss?

Most people could not.

Walk through the home and record each room. Open cabinets, closets, garages, and storage areas. Photograph valuable items, serial numbers, and receipts when available.

Keep copies of:

• The insurance policy
• Photographs and video
• Receipts
• Appraisals
• Renovation records
• An itemized home inventory
• Important contact information

Store the records somewhere you could reach if the house were inaccessible, such as secure cloud storage.

Update the inventory after major purchases and review it at least annually.

The Simple Answer

Review your homeowners insurance policy at least once a year and whenever something significant changes.

You do not need to become an insurance expert. You do need to know:

• What property is insured
• The policy limits
• The deductibles
• The major exclusions
• Whether separate coverage is needed
• How your belongings would be valued
• What happens if you cannot live in the home
• Whether changes to the property have been reported

Take your questions to a licensed insurance agent or broker and ask for explanations in plain language.

I cannot interpret your coverage or recommend a particular insurance product. I can remind you that protecting the home should continue long after the purchase closes.

If you are preparing to buy or sell and need local insurance-professional recommendations, I am happy to help you find someone qualified to review your specific situation.

Brandice Raybourn
Real Estate Broker | Coldwell Banker Danforth
Phone: 425-367-3881
Email: brandice@snohomesbybrandice.com
Serving Snohomish County, Seattle, the Eastside, and North King County