New year insurance policy review checklist

Insurance policies renew on their own dates, but households change on the calendar. Over a year, a family might buy a car, add a driver, finish a basement, start a side business, receive jewellery as a gift or pay off a mortgage. Each of those changes something on a policy, and carriers learn about them only when someone tells them. The start of a year is a natural moment to catch up, because the receipts, the tax papers and the memory of the year are all close at hand.

This checklist is organised by policy. For each one it lists the changes that matter, explains why, and ends with how to turn the review into a short list of calls. The result for many households is that nothing needs to change, which is a good outcome worth confirming.

Start with what changed this year

Before opening a single policy, write down what happened. These events almost always touch coverage.

• Marriage, divorce, a new baby, an adult child moving out or back in, or a parent moving in.
• A new, sold or paid-off vehicle, a new driver or a driver who moved away to school.
• A remodel, an addition, a new roof, a pool, solar panels or a detached shop.
• Valuable gifts or purchases: jewellery, watches, cameras, bicycles, instruments, art.
• A new job with a different commute, a change to working from home, or a business run from the house.
• A move, a second home, or a property that became a rental.
• A claim, a ticket or an accident, or a change in the household's credit.

Home, condo and renters

The dwelling limit is the first item. It should reflect what rebuilding the house would cost today, not what the house sold for. Remodels and additions raise that cost, and construction prices change year to year. Carriers adjust limits by an index at renewal, but an index does not know about the new kitchen.

Suppose a Boise couple finished a basement for $60,000 last spring and never told the carrier. The dwelling limit stayed at $350,000 while the rebuild cost rose to roughly $410,000. On a total loss, the policy pays $350,000 less the deductible, and the couple covers the rest unless an extended replacement cost endorsement makes up some of the gap. The figures are hypothetical.

Next, look at personal property. Holiday gifts often include items that exceed the policy's theft sublimits for jewellery, watches and similar valuables. Those need to be scheduled on a floater to be fully covered. Update the home inventory with a quick video of each room while the new items are still in their boxes. Finally, check the deductibles, the roof valuation terms and any water backup or service line endorsements against how much the household could comfortably absorb.

Cars and drivers

Confirm every vehicle and every licensed household member is listed correctly. A teenager with a new licence must be added; a child away at college without a car may qualify for a reduced rating or a distant student discount, depending on the carrier. A paid-off loan means collision and comprehensive are now optional rather than required by a lender, and on an older car the premium may no longer be worth the coverage.

Mileage matters too. A driver who now works from home may be rated for a commute that no longer exists, and a usage-based or pay-per-mile programme may fit a household that drives little. Check liability limits against the household's assets and match uninsured and underinsured motorist limits to them.

Suppose a household paid $600 a year for collision and comprehensive on a ten-year-old sedan now worth $5,000, with a $1,000 deductible. The most that coverage could pay on a total loss is $4,000, less than seven years of premium. Dropping it is a reasonable choice for a household that could replace the car from savings. The numbers are hypothetical.

Liability and the umbrella

Liability limits should rise with what the household has to lose. A paid-down mortgage, a growing retirement account, a teen driver, a new pool, a dog or a rental property all increase either the assets a lawsuit could reach or the chance of one. If the household has none of these and modest limits, that may still be right. If it has several, price an umbrella policy, which sits above the home and auto liability limits.

If the household already has an umbrella, confirm that every car, driver, property, boat and off-road vehicle is listed on it and that the underlying policies still carry the limits the umbrella requires. A new vehicle added to the auto policy but not to the umbrella schedule is a common gap.

Life, health and Medicare

Life insurance deserves a look after any change in dependants, income or debt. Check the amount against what the household would need, and check the beneficiary designations, which override a will and are easily left pointing at a former spouse or missing a new child.

Health coverage runs on enrollment windows rather than on a household's own schedule. Employer plans and marketplace plans generally allow changes only during an annual open enrollment period or after a qualifying life event such as a birth, marriage or loss of other coverage, and the qualifying event opens a limited window of its own. Deductibles and out-of-pocket maximums commonly reset at the start of a plan year, which is worth remembering before scheduling elective care.

People with Medicare have windows set by Medicare, including one at the start of the year in which someone already in a Medicare Advantage plan can make certain changes. The dates and rules come from Medicare, and plan availability varies by county. A review of how the current plan handled last year's prescriptions and doctors is the useful input, and a licensed agent can explain the options neutrally.

For a small business

Business policies price on exposures that change: payroll, revenue, vehicles, locations, subcontractors and property. Many are audited after the policy year ends, so an honest update now avoids a large bill later. Suppose a contractor's general liability policy was rated on $200,000 of revenue and the year closed at $350,000; the audit will charge premium on the difference whether or not the owner planned for it. That figure is hypothetical.

Also check that new vehicles, equipment and employees are on the right policies, that certificates of insurance issued to clients are still accurate, and that a home-based business has coverage beyond the homeowners policy, which excludes most business activity.

Turning the review into action

Gather the declarations page for each policy, the list of changes and the renewal dates. Mark each policy as no change, a change to request, or something to compare. Changes such as adding a driver or scheduling a ring are single calls to the carrier. Comparisons are worth doing when a renewal premium jumped, when a claim or ticket changed the household's rating, or when several policies could be placed together.

If you would like a second reader, send us the declarations pages and the list. We check each policy against the year's changes, compare the ones that warrant it across the carriers we represent in Arizona, Nevada, Utah and Idaho, and tell you which policies should stay exactly as they are. The analysis costs nothing.