Why Reviewing Home, Auto Insurance Should be Part of Your Year-End Financial Checklist – Bankrate.com

COVID-19 has shaped the face of 2020, delivering shockwaves through the economy and sending much of the American workforce into sudden unemployment. Record-breaking hurricane and wildfire seasons have further impacted millions of peoples daily lives and finances across the country. While there have been some signs of economic improvement in recent months, many Americans continue to face hardships. Despite this, it appears that a significant number of people may have left money on the table by failing to review or update their insurance policies in response to the unprecedented circumstances of 2020.

To study the importance of insurance policies to a consumers overall financial well-being, Bankrate partnered with YouGov to survey nearly 3,000 adults across the country in early November, asking what these policyholders did differently in 2020 that could have affected their insurance. We found that about 46% of people with home insurance policies and 36% of those with auto insurance policies did not review their 2020 policies. Of those who did not review their policies, nearly half (48%) with homeowners insurance and more than one-third (38%) with auto insurance should have done so based on lifestyle adjustments that could either help them save money or may have caused them to require additional coverage.

The survey also revealed some interesting trends about things people have done in 2020 that could have affected home and auto policy premiums. Of the U.S. adults that Bankrate surveyed, 21% improved their credit score, 15% did home renovations, 12% stopped commuting to work, 8% got a dog and 7% added new security to their home.

As everyone heads into 2021, it may be a good idea to pull out those policies to review them and make any changes needed before the new year begins.

In 2020, one-third of American adults have turned to their retirement or savings to pay the bills, especially those in lower-income households who were already struggling. Pew Research Center reports that about 25% of American households have been affected by job losses and layoffs this year, making money tighter than ever as COVID-19 numbers continue to spike ahead of an anticipated vaccine.

According to the World Bank, as the pandemic progresses, the economic damage is already evident and represents the largest economic shock the world has experienced in decades.

With money tight for so many Americans, people are looking for ways to save money wherever possible. Still, many may not have considered the importance auto and home insurance can have to their overall financial portfolio.

For many, their homes represent their largest asset as well as their highest expense. And many may not realize what activities and behaviors impact home insurance premiums. For example, simple daily life changes can lower rates. For the 7% of survey respondents with homeowners insurance who did not review their policy but added new security to their home, their insurance companies would likely have agreed to extend extra policy discounts in exchange for the additional protection.

Credit score, one of several factors that determine premiums, is another area where consumers can lower insurance costs. The 19% of survey respondents with homeowners insurance believe their credit score improved in 2020 and would likely be able to negotiate a lower premium with their insurance providers going forward.

An activity that can have either a positive or negative effect on home insurance premiums is home renovation. It depends what kind of work has been completed on the home some renovations, such as putting in a new roof, can decrease premiums, while others, such as adding a pool in the backyard, drive rates up. Based on survey results, the 17% of respondents with homeowners insurance who did not review their policy but completed home renovations may be over or underinsured and not realize it.

Since adding pets to the family seemed to be a popular activity in 2020 as well, its worth noting that owning certain dog breeds can also drive home insurance costs up or prevent home insurance providers from covering you.

Its a good idea for homeowners to check their existing policies and speak with their insurance providers to see where they can save money, either now or in the first half of 2021. Its also smart to check and see what kinds of activities may require additional insurance coverage so that there are no surprises in the event of a claim.

The amount of time people spend on the road has changed significantly in 2020 as well. Early on, the COVID-19 pandemic essentially cleared the roadways, and major car insurance providers Allstate, GEICO and Progressive all reported a 30% decrease in auto insurance claims related to damaged property and bodily injury through mid-2020, according to Fitch Ratings. Some insurance companies distributed refunds or extended discounts to policyholders because of so many cars grounded at home. Through the YouGov study, Bankrate found that many drivers did not take advantage of all the savings that might have been available to them. However, even as traffic levels begin to increase again towards pre-pandemic levels, there may still be some opportunities for car owners to save money.

Almost 40% of surveyed Americans with auto insurance reported that they had not reviewed their policy. However, more than 20% who had not reviewed their policy believed that their credit score had improved. Similar to home insurance, a credit score is typically an important factor in determining auto insurance premiums.

Working from home can also reduce auto insurance rates. For the 14% of auto insurance policyholders who have stopped commuting but still have not reviewed their auto insurance policy, its possible they can lower their auto premiums. Many of those working from home since the pandemic began will continue to do so into 2021, so it may be a good idea to contact your insurance provider and ask for a discount.

Insurance providers employ people to regularly review and evaluate their customers policies to ensure that they keep up with trends and charge appropriate rates. However, these people work for the insurance company, not for you, which is why its important to remain diligent with your policies.

Our study shows that only 54% of homeowners and 64% of auto insurance policyholders had reviewed their insurance policies since the beginning of 2020. Policyholders over 18 with a higher income were more likely to review their home insurance, with 60% making over $80,000 annually, compared to 47% of homeowners who make below $40,000. 64% of auto policyholders over 18 across all income brackets were more likely to have reviewed their auto insurance, compared to just 36% who make below $40,000.

Anyone can benefit from reviewing their insurance policies to identify savings, but it may be especially helpful for households with lower incomes. By cluing your provider into key lifestyle changes, you could save a fortune in insurance premiums and also perhaps find alternate coverage that is more suitable for where you are in life.

This survey makes one thing clear: by not regularly reviewing their home and auto insurance policies, policyholders are missing opportunities to save money and protect their most valuable assets. Insurance is an integral part of any financial plan because life is full of surprises. But even if you failed to take advantage of some of the unique opportunities that 2020 presented to save money on insurance, its not too late.

Many insurance providers have simplified the process, making it easier to monitor policies with online and mobile tools. You can also review your policies, file claims, track progress and contact customer service for support. 2020 may have presented new challenges for many of us, but taking a moment to review home and auto insurance policies could help you set yourself up for success and savings in 2021.

Bankrate.com commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 2,931 adults, including 1,968 with homeowners insurance and 2,441 with auto insurance. Fieldwork was undertaken November 5 6, 2020. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

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Why Reviewing Home, Auto Insurance Should be Part of Your Year-End Financial Checklist - Bankrate.com