Annual checkup: homeowners’ insurance policy

Homeowners’ insurance is essential, and your clients may have great policies. Still, it can be a helpful reminder -- and good reason to be in touch -- to urge your clients to conduct an annual check-up of their coverage.

Replacement-cost policies are generally most effective, meaning they cover what it would cost to rebuild a home and replace homeowner belongings. Replacement policies don’t cover all losses, however. Detached parts of a home, like garages, may not be covered, and jewelry or other luxury items may not be insured without a rider. It's important for homeowners to know their policies and adjust them as their lifestyles change.

It's also important to avoid the mistake of underestimating the dollar-amount of coverage. The cost of increasing the dollar-amount is generally low and can dramatically improve the extent of coverage. What's key to selecting a dollar amount isn't the value of a home, but what homeowners would have to pay to rebuild it from scratch. Anything less may leave them uninsured.

Remind your clients to read their policies carefully and be sure they still fit their needs. They can look for ways to reduce their payments, too, such as discounts for installing security systems, dead-bolt locks and fire detectors.