You were savvy enough to purchase homeowner’s insurance right after closing on your rental property and landing new tenants. That was just step one, however. It is smart to make updating your homeowner’s insurance an annual practice as part of your property management, in Washington D.C.
Here are four reasons to update:
1. Homeowner’s insurance is not tied to the property’s market value. As the not-for-profit Consumer’s Checkbook reports, it is estimated that more than one half of homes are still underinsured, in the event of a catastrophic loss. Industry changes, from how standard options are bundled to new add-ons, make an annual review the smart thing to do.
- Although property values may have fallen in the last few years, homeowner’s insurance has grown more expensive. That makes it more important to ensure that you continue to have adequate coverage.
- Property value includes land and the building(s)—but, as the Washington Post points out, consider that in the case of a catastrophic event and the need to rebuild, you already own the land; the coverage needs to be adequate to rebuild the building. The Post adds, “You can’t reduce your insurance coverage just because your home’s market value has decreased, either.”
- The most responsible tenants could still have accidents that damage your property. Ensuring that your homeowner’s insurance is adequate is always the smart move.
2. Avoid getting caught off-guard; check your policy’s exclusions, which can change without prior notice.
- Consumer’s Checkbook cites these common exclusions: “floods; sewer backups; earthquakes; damage from termites, pets, or other animals; damage from mold, mildew, dry rot, and wet rot;…war; and nuclear accidents and explosions.”
- Homes change, too. New homes become older ones and may require additional coverage as they do.
3. Changes in weather patterns are a reminder to check for adequate coverage under weather-related events.
- Stronger seasonal storms and winter icing may mean considering updating your homeowner’s insurance to include add-ons that address floods, earthquakes, mold, mildew and wet rot, for example.
- As FEMA’s website states, “Typically, there’s a 30-day waiting period from date of purchase before your policy goes into effect” for flood coverage.
- Washington, D.C. and Maryland fall into FEMA’s Region III, and FEMA news releases for that region can be accessed by clicking here.
- The Homeowner Flood Insurance Affordability Act was signed into law in March. FEMA suggests that you find details here as they are made available.
4. Shop around every few years for the best homeowner’s insurance rate.
- Consumer’s Checkbook followed its own advice and discovered that “It was common…that two different agents for the same company, when asked about the same type of coverage for exactly the same property, would recommend coverage levels differing by $100,000 or more.”
- Start your shopping by arming yourself with the right information. The Washington Post offers this advice: “You can get a report with your home’s replacement cost estimate for $7.95 [the cost at press time] at http://www.accucoverage.com, which accesses the same building-cost database that insurers use.”
RM Properties, an expert in property management, Washington, D.C., stands ready to partner with you to help protect your investment. Contact us to learn how we can help.