Published May 17, 2013
As your life changes, so do your insurance needs.
Whether you’re about to walk down the aisle, expanding your family or about to leave the workforce, protecting your assets with right amount of insurance coverage is key.
“As people become more successful, they’re reluctant to change their insurance and become underinsured,” says David Spencer, vice president of Premier Client Services at ACE Private Risk Services. And that can cost you money.
Experts recommend reviewing your policies annually and whenever you experience a life event, such as attending college, making a major purchase like a car or new home, getting married, having a child, changing jobs, renovating a home, or caring for an elderly parent.
“Every time you hit one of these milestones, it’s usually a good time to take the temperature and check the types of insurance and limits,” says Elaine Baisden, vice president at Travelers Personal Insurance.
When reviewing policies, make sure you are getting all the discounts you’re eligible for, like safe driver for auto insurance, no loss for home and the good student driver discount. Increasing your deductible can also lower your premiums.
For each stage of life, experts provide tips for what you should look for with your insurance.
Life Event: Going to College
“Going to college or moving out of a parent’s house—it’s really important to have renter’s insurance,” says Eric Vaith, assistant vice president of product management at USAA.
A parent’s homeowners policy will covers college students up to a certain limit for laptops and clothing. Students living in an off-campus apartment should have their own policy, and renter’s insurance is very affordable.
Life Event: First Job, First Car and Apartment
Once you’ve graduated from college, you begin to establish your life and you need the right protection.
“The first thing people have is a car or personal items in an apartment,” says Spencer.
A renter’s policy can provide coverage for your possessions in case of robbery or other damage.
When you buy your first car, Spencer suggests getting adequate liability coverage above the state minimum requirements. About one in seven drivers were uninsured in 2009, according to the Insurance Research Council (IRC), and uninsured motorist coverage and a small umbrella are great ways to start on a long-term insurance plan.
“Uninsured motorist coverage is a prudent choice given these hard economic times,” says Spencer.
Life Event: Getting Married
Getting engaged usually involves an expensive jewelry purchase. “After buying an engagement and wedding ring, up your renter’s policy or add a Valuable Personal Property (VPP) policy where you can schedule those specific items,” suggests Vaith.
While your homeowner’s policy will provide some coverage for expensive jewelry, fine art or other collectibles, experts suggest asking your agent if these require special coverage.
Life Event: First Home
The cost of homeownership doesn’t just include mortgage payments and maintenance costs, you also need insurance to cover your new exposure.
When you move into a new home, choose the right insurance company, stresses Spencer. Your carrier should provide you an estimate your house value and establish a replacement value for your home and possessions. “If you insure it to that value, most insurance companies will provide only 25% more of the estimated insurance costs. High- net worth insurance companies will replace the house to the full value.”
As you renovate and change your home, or when family members move out or into your home, Spencer suggests reviewing your policy to make sure you have proper coverage.
Life Event: First Child
“This is a great time for [parents] to think about life insurance—the younger you are, the cheaper it is,” says Vaith.
Life insurance can provide financial security to your family in the case of your death.
If you’re unable to work, disability insurance, which your employer may or may not provide, can protect you and your family from lost wages.
Life Event: Growing Family
Consider an umbrella policy once you own a car or home, or start accumulating assets. “You don’t have to be a millionaire to be sued like one,” says Vaith.
An umbrella policy provides coverage above and beyond the liability coverage in your homeowners, auto and watercraft policies. If there’s an accident and you get sued because of excessive damages or extensive injuries, says Vaith, the umbrella policy will protect your assets to a limit and cover legal fees for a lawsuit related to your policy.
“Umbrella policies also cover libel and slander if you’re sued because of something you wrote on social media or a blog,” says Vaith.
Life Event: Caring for Aging Parents
When parents move back in with their children, they can also bring some risks—especially if you need to hire people to help care for your parents.
“Anytime you’re hiring someone to come into your home, consider domestic workers compensation and Employment Practices Liability Insurance (EPLI),” says Spencer.
These policies will pay your employee’s salary if he or she becomes injured and protect you against any allegations or damages your employee could sue you for. If you’re hiring employees through a service, ask whether the service has adequate coverage.
Life Event: Retirement
If you choose to volunteer during retirement, make sure your insurance has coverage for not-for-profit directors, says Spencer. This coverage is similar to professional liability coverage but for not-for-profit work.
If you decide to spend time traveling, make sure you have the correct carrier that provides worldwide coverage on an umbrella policy as you travel internationally, says Spencer. These policies won’t cover health issues but they do cover renting an automobile and any personal liabilities you have at home.