Life changes that your insurer needs to know about

Marcus Pickett

When you apply for insurance coverage, your insurer will ask basic questions to help determine how much to charge you for coverage. But what happens when the answers to those questions change? You already have your coverage and pay your premiums -- do you have to tell your insurer if, for example, you have another child or have installed a swimming pool?

In many cases, you do. Your coverage may need to change to reflect the changes in your life. And if you keep your insurance company in the dark, your policy might not cover you when you need it.

Home insurance

Your home insurance covers your house, everything in it and injuries to those who visit. So if you make any changes that make your house riskier or more expensive to replace, your insurer will want to know.

  • Adding a swimming pool. Swimming pools are an "attractive nuisance" -- something that attracts children to your property and that can cause them to get hurt. If a child is injured or killed while using your swimming pool even without your permission), you and your insurance company are looking at medical bills and possibly a lawsuit.

To make sure you won't end up paying these costs out of your own pocket, you'll likely need to ask your insurer to increase your policy's liability limits. Most home insurance policies include a minimum of $100,000 worth of liability protection, according to the Insurance Information Institute. Pool owners, however, should consider increasing their liability coverage to $300,000 or $500,000.

  • You're thinking of getting a dog. Home insurance generally covers you if your dog bites someone who's visiting your home. But some insurers in some states exclude certain breeds like pit bulls, Doberman pinschers and rottweilers) from coverage, according to A.M. Best Co. The average claim for dog bites was more than $24,000 in 2009, according to the Insurance Information Institute, so it's in your best interest to make sure your insurer will pick up the bill.
  • You've made renovations. If you've made significant home improvements or additions to your home, you'll likely need to update your home insurance policy, according to the Insurance Information Institute. Many homeowners choose not to report these changes to avoid higher premiums, but a lack of adequate insurance coverage often is the result. When you first got your coverage, the amount you bought was based on the home's value. A new room or an updated kitchen makes your home more expensive to replace. So if it gets taken out by a tornado, your coverage if you didn't update it) won't be enough to return your home to its pre-disaster condition.

Auto insurance

Your auto insurance covers your car if you have optional collision and comprehensive coverage) and all the damage and injuries you cause with it. Anything that increases or decreases the chance your car will be in an accident is something your insurer needs to know about.

  • Your teenager gets a driver's license. Some policies will cover you if someone borrows the car once in awhile. But if your teen lives in your household and has access to your car, your insurer will want to know. Because of their inexperience, teen drivers are more likely to get in accidents, according to the National Association of Insurance Commissioners, and are more likely to cost your insurer money. So your insurer will want to increase your premium to reflect that risk. If you don't inform your insurer and your teen causes an accident in your car, you could end up on the hook for thousands of dollars in damage.
  • Your commute changes. A change to your driving habits is another reason to contact your auto insurer. Your premium is based on how often you drive your car and how far, according to the Insurance Information Institute. If you retire, start working from home or move to shorten your commute, for example, you may find you're entitled to a discount.

Life insurance

Life insurance offers financial protection to those you leave behind. So the amount of coverage you need changes as your life changes.

  • You change jobs. A higher salary may lead to new financial commitments or a higher standard of living, the Insurance Information Institute says. That means your dependents may need more money after you're gone. A job loss also may require life insurance changes. If you're losing the life insurance coverage your employer provided, you might want to replace that coverage on your own.You have a baby. The more children you have, the more money your family will need once you're gone. Telling your insurer the good news gives it time to help you adjust your coverage accordingly. It also may be necessary to consider expanding life insurance coverage to the primary child-rearing parent. If this parent were to die or become disabled, the child-rearing responsibilities would constitute a major expense.

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