5 steps to make sure you have enough homeowners insurance coverage

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• Review your current homeowners insurance policy at the beginning of the year and evaluate if you need more coverage.
• It's also a good time to winterize your home to avoid weather-related damage.
• If you made renovations or improvements to your home last year, you will need to reassess the cost to rebuild your home based on increased market value.
• Review optional coverage, especially flood insurance because the majority of flood claims last year occurred outside of flood zones.
• Policygenius can help you compare homeowners insurance policies to find the right coverage for you, at the right price »

During certain times of the year, homeowners insurance claims spike. Halloween mischief increases claims in the fall. During the winter, cooking accidents, holiday decorations, and package theft are the culprit for holiday homeowners insurance claims.

For the New Year, as people reevaluate their life insurance needs, they should also review their homeowners insurance policies to make sure they have enough coverage. Additionally, homeowners should consider winterizing and weatherproofing their home to avoid claims from snow, ice, or freezing pipes.

What to look for in a homeowners insurance company

A survey found that the majority of homeowners want a provider that has been in the business for a while with a strong financial rating. Half of homeowners are looking for a great user experience and response to claims. 

It's important for homeowners to shop around, compare quotes, coverage offerings, and research the financial stability and reputation of homeowners insurance providers, according to Bill Martin, president and CEO at Plymouth Rock Home Assurance.

Martin said that because homeowners insurance is not required — unless by a mortgage lender — sometimes homeowners don't have high enough liability limits to protect their assets. An annual checkup and inventory of your policy coverage can help you stay on top of your insurance needs so you don't end up without coverage.

Here's a checklist for the beginning of 2021 to make sure you are getting the most out of your homeowners insurance.

1. Review your current homeowners insurance policy

Martin said that the main goal of homeowners insurance is to replace or rebuild your home if it is damaged. He notes that if you made renovations or improvements last year that increased your home value, your limits should be reviewed and increased to reflect that.

Martin recommends that considering how much would it cost to rebuild if a fire burned the house. He said the cost to rebuild should also consider the cost of materials (lumber) and labor have gone increased.  

Martin recommends updating your home inventory list and reviewing it with your agent to make sure your limits are high enough to cover replacement costs. If you received high-value presents during the holidays, does your policy cover it, or do you need to increase your liability limits? Martin noted that expensive gifts that are damaged, stolen, or lost from your home may be covered, but there are limits (like with expensive jewelry). 

2. Review your add-on rider coverage

Because homeowners insurance is not required by law, most people only get what's required by their mortgage lender or condo association.

Martin said that unless homeowners live in a designated flood zone, they are not required to have flood insurance. However, he noted that last year the majority of flood claims were from people that didn't live in flood zones and they were not covered under their homeowners insurance because flood insurance is optional coverage. 

Martin said that when thinking about optional add-on coverage like flood insurance or pet insurance, do not focus on whether it has happened before. He said instead the concern should be about claims that could happen in the future. If you don't already have coverage when "it hasn't happened before" actually happens, you will pay out of pocket.

3. Instead of separate policies, consider combining them

Martin said that it can take a bit longer to find the right homeowners insurance provider and policy so people tend to get separate policies for pets, special jewelry, and high-value objects. He notes that homeowners insurance offers several add-on coverages like pet insurance and special jewelry so there's no need to have separate policies.

It may also be cheaper to have a single policy. Martin suggests asking, "What optional coverage is out there and what riders could save money?" This is a conversation homeowners should have with their agent.

4. Make sure your home is weatherproofed 

Martin noted that in the winter, homeowners in cold-weather states see damage from insurance perils like the polar vortex or the buildup of ice and snow that cause damage or accidents.

Martin said that many claims in winter are due to ice damage, and if you don't have the tools to remove snow and ice from your roof or shingles, you should have a contractor do it, as this is cheaper than having a leaking roof or damaged gutters. He warned that homeowners are considered negligent for not clearing and removing snow or ice from sidewalks and driveways, which can lead to a personal liability claim.

5. Decide whether to switch providers

If your homeowners insurance company hasn't provided the level of service you expected, maybe it's time to select a new provider.

Remember that a cheap price doesn't necessarily mean good customer service. The average cost for homeowners insurance will vary based on the state you live in and whether your home is urban or rural. Focus on customer satisfaction rankings, like those from J.D. Power, and comparison shop. This is especially important for those living in disaster-prone areas. 

Ronda Lee is an associate editor for insurance at Personal Finance Insider covering life, auto, homeowners, and renters insurance for consumers. She is also a licensed attorney who practiced litigation and insurance defense.

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