It's Time for an Annual Review of Your Personal Risk Management Plan

JANUARY 4, 2022

The start of a new year is a great time to review your personal insurance policies.

Below is a list of items that may negatively impact your insurance. If any of the items pertain to you, contact an insurance broker to discuss risk management strategies.

Relationship Status & Living Arrangements

• Getting married: If you are recently married, you may want to add your new spouse as a named insured on your insurance policies. This streamlines payment and the repairs in the event of a loss.
• Divorce: If you are divorced or in the process of getting a divorce, this impacts your personal insurance. The insurance contract provides coverage for a spouse or significant other residing in the household. As settlements are reached, you may need to update the named insureds so that payment goes to the correct party. You may also need to update the drivers on your auto policy.
• Household members: Homeowners policies contain definitions of insureds that restrict who gets paid in the event of a loss. If you have friends, a roommate or non-relatives living in your home, your homeowners policy may not respond if their items are damaged.   

Home & Property

• Dwelling coverage: As the price of lumber skyrockets, it is important to review dwelling coverage to make sure it’s in line with current rebuild costs. A rebuild appraisal is different than a tax or market appraisal. It calculates how much it costs to rebuild your home in the event of a total loss. If a rebuild appraisal has not been completed in the last five years, ask your broker to request one on your behalf.
• Protection devices: Having protection devices installed in your home (e.g., a centrally monitored alarm system, a generator) may save you premium.
• New property: If you recently purchased or are in the process of purchasing property, you may be able to extend liability to a new location from your current policies. This may save you the cost of a new policy.
• Valuable articles: If you purchased or plan to purchase a new valuable item or collectible, you may be able to add it to a valuable articles policy. Establishing a valuable articles policy can generate a credit on your homeowners policy, saving you premium dollars.

Children

• Youthful drivers: Some parents and guardians choose not to inform their insurance company that their children are driving to save insurance premium. This is not good practice for a multitude of reasons. Contact your broker to discuss adding the kids to the auto and umbrella policies. Ask how you can mitigate cost while still putting liability coverage in place.
• Children on internet: Kids using the internet poses a host of issues, such as cyber bullying, stolen identities and gaming with strangers. Your insurance broker can assist you with cyber protection and identity theft. Review our cyber best practices checklist. Your broker should also provide you with cyber alerts to assist you with protecting your family accordingly.

Domestic Workers & Contractors

• Hired help: If you have hired help in the home (e.g., nanny, chef, housekeeper, driver), they are liability exposures. Review our liability checklist for employing domestic workers, which includes guidance about recruiting domestic workers, managing the workplace, and terminating/ending employment.
  • Your insurance carrier may be able to assist you as well. Some carriers will run complimentary background checks on your behalf. Others will provide domestic employment practice liability coverage, which may protect you in the event of a termination.
  • Another area to consider for domestic employees is workers’ compensation. To find out if you are required to provide workers’ compensation insurance in your state, visit: gtm.com/household/resource-center/workers-comp-requirements
• Contractors: If thorough vetting is not completed before hiring a contract for a project, you may have both legal and financial ramifications. Review our checklist for hiring a contractor.
• Construction: If you are planning to do a remodel or construction on your home, you need to inform your insurance carrier. All home insurance policies have limitations on the value of renovations they will cover before the home policy is void. Some insurers may not cover renovations at all.

Personal Assets

• Boards: If you sit on a board or are a member of a homeowners association, your personal assets may be at risk. Review the insurance policy the board has in place. Confirm the established liability limits will cover your personal assets in the event of a loss. If the liability limits are insufficient, talk to your broker about adding protection on your umbrella policy for your board activities. See our checklist for individuals who are considering joining or currently serving on a nonprofit board.
• LLCs and trusts: If you create an LLC or a trust as part of your asset protection strategy, the LLC or trust can be listed on your homeowners and umbrella policies to afford an additional layer of asset protection.
• Umbrella limits: Net worth fluctuates. Check your umbrella policy to make sure you have adequate limits in the event of a loss. Does your policy include attorney’s fees? Do you have uninsured/underinsured motorist coverage? Have your underlying requirements changed? When reviewing your umbrella policy, remember, future earnings are at risk. Injured parties may sue you for what they think you are worth, and are not restricted to the limits on your umbrella policy. Review this annually with your insurance broker.