Spring cleaning for insurance

While you're doing your spring cleaning this year, keep your eye out for your insurance policies. And when you find them, make some time to give them a good look.

Time to dust off your policies.
Like any other personal finance product, insurance policies need regular review and possible adjustment. Inadequate coverage can lead to major personal financial loss. If you haven't really examined your policies in years, you're not alone. A good insurance review can save you money and possibly head off financial disaster in the event of a loss.

Home insurance

Home insurance savings

Are you getting all the discounts to which you're entitled? If you've recently installed a security alarm, for example, you could save money on your home insurance. Other common discounts go to:

• Customers age 55 and over
• Long-time customers
• Customers who carry auto insurance with the same company
• Disaster-resistant building improvements

April showers bring spring . . . floods. And home insurance doesn't cover flood damage. Flooding can happen any time of year, but spring makes homeowners especially vulnerable. If you're inundated by water due to snow melt, heavy rains or a rising river, you're financially on your own unless you have flood insurance.

Flood insurance policies are available from most home insurers through a program administered by the National Flood Insurance Program (NFIP). The NFIP has defined specific coverages and rates. Premium estimates and policy details are easy to get from FloodSmart.gov.

Flood insurance can be relatively inexpensive, depending on where you live. For example, a homeowner in a low or moderate risk zone who wants the highest level of structure and contents coverage can choose $250,000 in structure and $100,000 in contents coverage for $1,251 annually; that goes up to $2,462 in high-risk zones and $5,358 in high-risk coastal zones. A variety of lower coverages are available depending on your budget.

If you live a zone judged low to moderate risk, you qualify for a Preferred Risk Policy (PRP). This lets you buy less coverage and save money. A homeowner can purchase a minimum of $20,000 building and $8,000 contents coverage for $112 a year ($25 more if there is a basement). There are flood policies available for renters and businesses, too.

Most Americans neglect to purchase flood protection. Yet your home has a 26 percent chance of flooding as opposed to the 9 percent chance of fire during the course of a typical 30-year mortgage, according to the NFIP. In fact, one-third of claims paid by the NFIP in 2006 were in "low flood risk" communities.

If water is rising around you now, it's too late. Flood insurance has a 30-day waiting period. For more, see Insure.com's flood section.

Are you planning on a spring building project? If you'll be adding an addition or making other major renovations, make sure your insurer updates your structure's relacement coverage amount to reflect new rebuilding costs.

Did you give or receive a special piece of jewelry this Valentine's day? It may be insured against theft only up to $1,000 on your home policy. Valuable items such as jewelry and art need to be "scheduled" separately in order to be fully insured.

On the other hand, if you've been paying for a $5,000 floater on a fur coat that's no longer worth that, cancel your floater and save yourself the money.

Shhh, do you hear that sound? Probably not. That's insurance companies quietly adding percentage-based deductibles to new and renewed home insurance policies in some areas of the country. In case of loss, you wouldn't pay the $500 or $1,000 deductible you originally signed up for; you'd pay 1 to 5 percent of your house-coverage amount before insurance kicks in.

Residents of hurricane and flood-prone regions like Texas and Florida are now familiar with percentage-based deductibles, as insurers seek to shift more of the claims burden to homeowners. But East Coast residents, where windstorms and hurricanes can also take their toll, don't have the same level of awareness. You and your neighbors may already have a percentage-based deductible in place and not know it.

If disaster did strike your home, would you be able to give your insurance adjuster a complete list of your possessions? Videotaping the contents of each room is one easy way to make a record of your belongings. Another convenient way is to use the free "Know Your Stuff" home-inventory software provided by the Insurance Information Institute.

Auto insurance

Auto insurance savings

Can you squeeze any other discounts out of your auto policy? See if you qualify for discounts on:
• Antilock brakes
• Low-mileage usage
• Air bags and other safety features
• Your good driving record or age (50 and up)

You can't control spiraling gas prices at the pump, but you can control your auto insurance costs. If your car is getting on in years, it might not be worth it to continue paying for collision and comprehensive coverages. Check your car's current used value and decide if the premiums are worth what you'd get back in the event your car is totaled or stolen.

Or, consider raising your deductible amount in order to lower your premiums, if you are able to pay a higher deductible out of pocket if needed.

Life insurance

Life insurance savings

If you're shopping for a new policy:

• Comparison shop online
• Consider term life as a way to get the most coverage for your dollar
• Improve your health before you're underwritten
• Keep a good credit rating, which can affect your premium rate
• Look at prices of "low-load" policies that are sold directly from life insurers.

If you already have a policy:
• Pay annually rather than monthly for overall lower premiums
• If you need to increase your life insurance, look at the cost of adding a rider to your current policy vs. buying another policy
• If your health has improved significantly since you purchased your policy, you may be able to have your premium rate adjusted to reflect your new underwriting category.

Probably no other insurance policy deserves more regular attention than your life insurance policy. After all, lifestyle changes impact your need for life insurance: marriage or divorce, new babies, new debts, paid-off debts or children graduating from college can make your coverage needs rise or fall.

Insure.com's Life Insurance Needs Estimator Tool can help you pinpoint your current recommended coverage amount.

If you have term life insurance, are you keeping track of when your policy expires? If it's been a while since you bought a 15-year term policy, it's time to start making plans for coverage beyond that point.

It's not just your policy that needs a look. How about your insurer? Is it financially healthy? Financial strength ratings are crucial for evaluating life insurers. Find out your company's Standard & Poor's rating with Insure.com's Insurance Company Ratings Lookup Tool.

Overlooked but important coverage

One of the most valuable coverages is disability insurance, which pays up to 60 percent of your income if you become disabled and cannot work. According to the Social Security Administration, a 20-year-old worker has a 3-in-10 chance of becoming disabled before retirement age. Disability insurance is most affordable when purchased through a group policy at work; another good way is to add a disability rider to your life insurance. Individual stand-alone policies are also available.

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