Homeowners should review their home insurance policies at least once a year. Getting a renewal notice is a good reminder to do it. Certain life milestones, home renovation projects, and other scenarios should also trigger a policy review. If you don’t regularly evaluate your coverage, you may find yourself underinsured or overpaying.
Why you should review your homeowners insurance policy at least once a year
Home insurance policies usually renew every year on the anniversary of your policy’s effective date, unless you cancel. You should receive a written notice from your insurer ahead of the policy renewal (how far in advance depends on your state). If you choose not to do anything, your coverage will continue as-is for another year so long as payment continues.
Ideally, before renewing, review your policy and make sure your coverage is still adequate. Home values and rebuilding costs change over time, and if your coverage hasn't kept up, you could end up paying a lot more out of pocket in the event of a claim.
And you can't assume your insurer is still giving you the most competitive rate without doing some comparison shopping. Get quotes for the same coverage types and policy limits (or as close as possible) from at least three insurers to compare.
Life changes that require a homeowners insurance review
Outside of an annual checkup, these life events are good reasons to revisit your policy.
-
Getting married: When you tie the knot with your significant other and combine personal property or assets, make sure your policy still provides adequate coverage. Some insurers offer discounts for married couples, as well. You may also want to add your spouse as a named insured on the policy so that they have the ability to file claims or make policy changes.
-
Getting divorced: If you part ways with a spouse and ownership of the home is changing hands, make sure the policy reflects who actually owns it. If they're taking a lot of belongings with them, you may not need as much personal property coverage.
-
Adding onto your home: If you built an addition or made other structural changes, you'll want to increase your dwelling coverage (the maximum amount an insurer will pay to rebuild your home) to reflect the added square footage and rebuilding costs.
-
Buying valuables: Purchasing big-ticket items like furniture, jewelry, or electronics could mean you need to increase your coverage limits to protect against damage, theft, or loss of those items.
-
Getting a dog: Many insurers have breed restrictions and won’t insure certain types of dogs — meaning you won’t be covered if your dog bites someone or damages their property.
-
Starting a home business: Home insurance generally doesn’t cover liability claims for home businesses and might limit (or exclude) coverage for business equipment. You may need to get business insurance or purchase an endorsement (optional add-on) to broaden the coverage your existing policy offers.
-
Changing income: If you retire or experience a sudden drop in income, you may find it more challenging to afford home insurance. You can shop around for better rates, consider increasing your deductible, or look for discounts.
-
Paying off your mortgage: No more lender means no more coverage requirements. Home insurance becomes optional at that point, though going without it is a big gamble. It's a good time to revisit your policy and make sure it reflects what you actually need — not just what your lender required.
How home renovations impact your insurance policy
Certain home renovations can drastically alter your coverage needs because they affect the replacement cost of your home. Here’s how:
-
Kitchen or bath remodels: Upgrading the materials in your kitchen, bath, or other areas may increase the cost to repair or rebuild your home.
-
Added structures on your property: Adding a deck, pool, guest house, and other structures to your property may increase how much coverage you need for your dwelling, other structures, or liability (the part of your policy that covers legal fees, medical bills, or property damage if you or someone who resides in your home is responsible).
-
Home additions: Any renovations that increase the square footage of your home will likely increase your home’s replacement cost, and therefore necessitate a higher coverage limit.
-
System upgrades: Upgrading major systems like your roof, HVAC, plumbing, or electrical systems may require a coverage review. Some upgrades may even earn you discounts.
External factors that can impact your home insurance
There are also some external factors that may affect your coverage needs, even when your home and lifestyle have stayed the same.
-
Rising construction costs: Inflation, high demand, supply chain issues, and economic factors like tariffs have combined to drive up the cost of labor and materials in recent years. This makes it more expensive to repair or replace your home, and over time your existing coverage may no longer cover 100% of what it would take to rebuild in the event of a total loss.
-
Frequency of natural disasters: If your area is seeing more severe weather, your current coverage may no longer be enough. Flood damage, for example, isn't covered by standard homeowners policies. You'd need to add an endorsement or purchase a separate flood insurance policy. And wildfire coverage can often be added as an endorsement to your existing policy if you live in a fire-prone area.
-
Rising crime rates: If crime rates are going up in your area, your home could be at higher risk for break-ins and theft. Make sure you have enough personal property insurance to cover your belongings.
Checklist to review your homeowners insurance policy
When it’s time to review your home insurance, use this step-by-step guide to see if your coverage still meets your needs.
-
Check your current coverage limits. Review your policy documents to determine your current limits for each coverage type, as well as your deductible (how much damage you’re responsible for covering out of pocket), endorsements (add-on coverage types), and other policy details.
-
Calculate your home’s replacement cost. Determine your home’s current replacement cost on your own, by getting quotes from insurers, or by scheduling an insurance appraisal. Compare it against your coverage limit. Ideally, your dwelling coverage amount should be close to or equal to the full replacement cost
-
Update your home inventory. Create a home inventory of your personal property (or update your existing inventory if you already have one). If you have a lot more belongings to cover than when you last updated your personal property coverage, you may want to increase your limits (or add scheduled personal property coverage to insure specific valuables like jewelry).
-
Consider your liability needs. Personal liability insurance covers your financial obligations if you or a household member is responsible for someone else’s injury or property damage. This includes medical bills, property repairs, or legal expenses. If you had a significant gain in income or assets, you may want to increase coverage or get an umbrella policy that kicks in when a claim exceeds your policy’s liability limit.
-
Check your deductible. Your policy’s deductible is the amount of a covered loss you pay for out of pocket. Insurance will cover the rest, up to your policy limit. You can raise your deductible to lower your premium (the cost of your policy), but always make sure you choose a deductible you could easily afford at a moment’s notice.
-
Look for new discounts. You may become eligible for discounted insurance rates if you installed a security system, made home hardening upgrades to your home, bundled your home insurance with another type of policy, and more.
-
Consider endorsements. You can add endorsements to your policy to get coverage for things your base policy won’t cover, such as earthquakes, wildfires, identity theft, and more.
-
Shop around. Get at least three quotes from different insurers to compare. Be sure to specify the same coverage types, limits, and deductibles each time for a true comparison.
How to update your homeowners insurance policy
If you need to make a home insurance coverage update, you might be able to start the process online. Otherwise, you may need to call your insurer. Most changes can take place immediately, without needing to wait for your policy to renew. Keep in mind that adjusting your coverage may affect your policy cost. It's worth asking your insurer about the impact before making any changes.
Frequently asked questions
Does my homeowners insurance automatically update every year?
Home insurance automatically renews each year if you don’t take any action. Some policies have inflation guards that slightly increase coverage limits over time, but they do not account for major adjustments to your home’s replacement cost or personal life changes. You are responsible for notifying your insurer of significant changes and updates to your coverage needs.
Can I change my homeowners insurance coverage in the middle of a policy term?
You can change your home insurance coverage or switch to a new insurance provider in the middle of a policy term. Any adjustments you make to your policy will take place immediately, without needing to wait for the renewal date.
What happens if I forget to review my policy after a remodel?
Home remodels may significantly increase your home’s replacement cost. If you don’t adjust your coverage limits, you may find yourself underinsured and short on needed funds in the event of a total loss. In addition, you may not be carrying enough coverage under your policy’s coinsurance clause, which could result in a penalty where the insurer only covers a loss for a percentage of what you expect.
How do I know if I am overpaying for home insurance?
Get a few quotes from other insurers when you do your annual home insurance review. Check your current declarations page for unnecessary coverage, and ask your insurer about all available discounts and bundling opportunities.
