After years of adding kids and extra coverage to auto insurance plans and checking to make sure homeowners polices cover a nanny or babysitter, many empty nesters forget to change those policies once the kids have moved out.
“Any major change in your life should trigger a call to your insurance agent,” says Jeanne Salvatore, senior vice president and consumer spokesperson for the Insurance Information Institute.
What are some transitions that might change your insurance needs?
Your Kids Are Moving Out
When your grown children move out, they take the need for some insurance coverage with them. Mary Collins of Brookfield, Conn., found that taking her kids off the family car insurance policy saved quite a bit. She even started saving when the kids left for college. “They all went to school far away, and they didn't take the car to college,” she says. “When they were away, they weren't on the insurance.” Collins would add the kids back during summer months when they came home.
When kids move out, your policies should reflect the change. You might take the kids off your auto policy, but don't scale back on your collision and comprehensive auto coverage, says Jack Hungelmann, author of Insurance for Dummies. If you're in an accident, you still want to make sure you have enough coverage.
If the kids haul that big-screen TV and their laptops from your home in Albany to their new digs in Philly, you can save money by taking those off your policy, too, says Salvatore.
You're Downsizing
If your empty nest inspires you to move, your insurance will change even if you don't buy a new home. If you're renting instead of buying, you still need coverage for your stuff. Renters' insurance will cover your possessions without charging you for the structure. And if you're commuting less or working at home, ask your agent if that can reduce your total policy.
You're Having Fun
With fewer people in your home, your umbrella policy cost should go down, but, Hungelmann notes, you still need enough insurance coverage to protect your liquid assets over and above your auto or homeowner's coverage. The more assets you have, the more coverage you'll need, says Hungelmann.
Now that your free time is really yours, hopefully you can fit more fun into your days. Whatever activities you do, make sure your umbrella policy covers things like boat rentals or use of other types of recreational vehicles. If you buy a gown-up toy, like a snowmobile, check to make sure your policy specifically covers that, too, says Hungelmann.
If your plans take you away from your home base for several months and your car will just sit in your garage, you can take collision coverage off while you are away (leave the comprehensive coverage in place in case something damages it), says Salvatore. Just don't forget to start it up in time for your return!
You're Hiring Help
So you might not need a nanny for little ones any more, but hiring a housekeeper or a gardener might appeal to you. If someone’s working around the house, check with your agent to make sure those people are covered in case they are injured on your property. If you hire a caregiver who will use your car regularly, Hungelmann says it's worth a call to your agent to see if they need to be added to your auto insurance policy.
Some states also require workers' compensation insurance for workers who meet certain qualifications. For example, a full-time worker in New York needs coverage, but if you're in Connecticut, that coverage is necessary for part-time employees, too.
You've Shifted Some Assets to a Trust
According to Hungelmann, protecting your assets with a trust is a smart financial planning move for families. But if you have moved some of your assets, like your home, into a trust, make sure the actual trust is covered under your homeowners policy. Trust assets are not included under a typical homeowners policy, says Hungelmann, which can leave a big investment vulnerable. Check with your agent to make sure your trust is named in your policy.
This new stage of life is exciting and can lead to great adventures and new activities. For your own protection and peace of mind, make sure your coverage keeps up with those changes.
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