Why Reviewing Insurance Policies Annually Makes Sense and Saves You Money

By the Mercury Team

Life changes fast, and the insurance policy that worked for you a year ago might not be the best fit today. That’s why reviewing your policies annually is not only necessary, but also financially beneficial. In this blog, we’ll go over what an annual insurance review entails, the top reasons for doing it, and how it can save you some money.

What Does Reviewing Your Insurance Policy Involve?

A review of insurance policies simply means going through the details of your coverage to make sure everything still aligns with your current needs and budget.

Here’s what reviewing your auto and homeowners insurance policies typically involves:

• Coverage limits: Do you have enough coverage to protect your assets? For instance, is your auto insurance liability limit sufficient to cover potential accidents, or does your homeowners insurance fully account for your property value and belongings?
• Deductibles: Are your deductibles set at a level you’re comfortable paying out of pocket if you need to file a claim? Sometimes, adjusting your deductible can lower your premiums while still keeping your coverage effective.
• Premiums: Are you paying a fair, competitive rate? Changes in your life or driving habits might qualify you for lower premiums or additional home and auto insurance discounts.
• Exclusions: Are there gaps in your policy where you might need added coverage? Understanding what isn’t covered is just as important as knowing what is.

Top Reasons Review Your Insurance Annually

Here are the top reasons to make an annual insurance review part of your routine:

Adapting to Life Changes

Big milestones can mean big changes to your insurance needs. Let’s look at some common scenarios where this might be the case:

• Buying a new car: Whether you’re upgrading to a brand-new model or purchasing a used car, your auto insurance will need an update. For financed or leased vehicles, lenders usually require comprehensive coverage and collision protection.
• Moving to a new home: No matter if you move to the next city over or relocate to a different state, location can impact insurance rates. For auto insurance, your premiums could change due to specific area risk (e.g., high or low accident rates, high or low crime rates, etc.). For homeowners, your new property’s value and any location-specific risks, like severe weather or crime, might mean adjustments to your coverage.
• Getting married or divorced: Combining households after getting married can mean new opportunities to save, like bundling your auto and homeowners insurance with your spouse’s policies. On the other hand, a divorce may require splitting coverage or updating beneficiaries.
• Home renovations: If you’ve recently renovated your home—e.g., adding a new room, upgrading your kitchen, or building a backyard deck—it likely increases your property’s value, so your insurance policy should reflect these changes.

Discovering Discounts and Savings Opportunities

Everyone loves saving money, right? A yearly policy review can uncover discounts you didn’t even know you qualified for. For example:

• Bundling your policies: Combining your auto and homeowners insurance is an easy way to save.
• Upgrading safety features: Installing a home security system or car anti-theft device could lower your premiums.
• Being a safe driver: If you’ve had a clean year on the road, you might be eligible for a safe driver discount.

Staying Compliant with Policy Requirements

Reviewing your policy also means ensuring you’re staying compliant and meeting certain requirements. For instance, California raised its minimum auto insurance requirements for 2025, so California drivers should double-check to ensure they’re meeting those minimum coverage limits.

Another example is lender requirements. If you’re financing a car, your lender probably requires comprehensive and collision coverage. If you’ve paid off a loan, you might be able to adjust your coverage to lower your costs.

How Reviewing Insurance Policies Saves You Money

Nobody wants to pay more than they have to—or be caught off guard by unexpected costs. An annual review of your insurance policies can help make sure you spend your hard-money money wisely. Here’s how:

Avoiding Overpayment

If you’re not updating your policies, you might be paying for coverage that no longer makes sense. For instance, if you’ve been driving the same car for years, it might be time to rethink your coverage. A car that’s fully paid off and has a low market value may not need comprehensive or collision coverage anymore.

From a home insurance perspective, maybe you’ve sold high-value items like expensive jewelry or electronics that were covered by an endorsement. Removing this coverage for items you no longer have can help lower your premium.

Prevent Gaps in Coverage

Overpaying is no fun, but neither is being uninsured. If something unexpected happens and your policy doesn’t cover it, the financial fallout could be devastating. Say you’re in an at-fault accident, and your liability limits aren’t high enough to cover all the damages. If your policy only covers $25,000 but the total damage is $50,000, you’ll be responsible for the $25,000 difference.

Here’s another example. Say you live in an area prone to flooding or earthquakes, and thought your homeowners insurance would cover the damage—only to find out it doesn’t. Standard homeowners insurance policies typically don’t include coverage for natural disasters like floods or earthquakes. If you don’t have a separate policy or endorsement for these events, you could be left paying tens of thousands of dollars out of pocket to repair your home or replace your belongings.

Frequently Asked Questions About Reviewing Insurance

Let’s look at a few frequently asked questions regarding an insurance policy review.

How often should I review my insurance policies?

You should review your insurance policies at least once a year or anytime you experience a major life event, events like buying a new car, moving, or getting married.

What are the benefits of an annual insurance review?

An annual review helps you save money, adapt your coverage to your current life, and give you peace of mind knowing you’re fully protected.

Conclusion

Taking a little time each year to review your insurance policies can make a big difference. It can uncover discounts, close coverage gaps, and prevent overpayment so you can maximize your money. Also, it provides peace of mind knowing that your coverage is up-to-date and aligned with your current needs.

Looking for a new policy? Mercury offers cheap auto insurance and cheap homeowners insurance without sacrificing quality. Reach out to us today, and we’ll customize a policy tailored to your needs and budget.

Contact us today for a fast, free quote!