Smart Insurance New Year's Resolutions

The exercise equipment gathering dust in Americans' bedrooms and basements is a familiar sign of the way New Year's resolutions often are quickly abandoned. But a few resolutions you'll not only want to make but also stick with involve being more prudent about insurance.

That means spending wisely and getting the coverage that matters most. It's a good idea to start each year by taking stock of your coverage because auto, home, life and other insurance needs change over time -- as you move, switch jobs, add to your family, change vehicles and grow older.

When you have to use your insurance, the last thing you want is to learn that you don't have enough coverage. But you also want to make sure you aren't carrying more insurance than you really need.

Here are some New Year's resolutions to help you fine-tune your insurance policies.

Auto Insurance

Because auto insurance premiums may be tied to how often you drive and to your vehicle model, make certain you've alerted your insurer to any changes in driving habits, says Ron Moore, a senior product manager for MetLife Auto & Home.

Consumers should "make sure their policy accurately reflects how their vehicles are used," he says. "Back when gas prices were low, we wanted to take the big luxury car to work. Now, with gas at $4 per gallon, you're driving the compact, and that can make a difference."

Consider dropping collision and comprehensive coverage on older vehicles to save money, he adds. Collision pays the costs of repairing cars following accidents, while comprehensive pays for losses not caused by accidents, such as theft or fire damage. Since your insurance company will repair or replace only up to the value of the vehicle, paying for full coverage on an aging car may not be worth it.

Another great resolution is to drive carefully, says Pete Moraga, spokesman for the Insurance Information Network of California.

"The most important thing that determines what you pay for auto insurance is your driving record," he says. "Observe the law."

Home Insurance

The start of a new year is a great time to update the inventory of your possessions. You'll need an accurate list if you ever have to make a home insurance claim.

"You probably have received (holiday) presents, and there are new things in the house," says Ron Moore, senior product manager with MetLife Auto & Home. "Some of them could be worth a lot: your TV, your stereo, your computers, your clothes."

If you don't want to take time to write things down, "a very common way is to make a video recording of your home," he adds. "If there is a theft, you can go back and say 'I had this stuff.'"

Consider a special rider to cover expensive items that may exceed the limits of your home policy.

"If you have a big flat-screen TV that costs $1,000, you may want to schedule that separately," Moore notes. "The cost for a rider is usually pretty cheap. You can make sure your TV is covered for everything, including your 6-year-old kid hitting a ball through it."

Finally, make sure your home insurance coverage remains high enough if you ever have to repair or rebuild at today's construction prices.

Life Insurance

As you launch into a new year, look for ways to cut life insurance costs, says Debra Newman, who chairs the board for the nonprofit Life and Health Insurance Foundation for Education, or LIFE.

"Have you become healthier?" she asks. "Did you stop smoking? Did you lose a significant amount of weight? Are you off medications? You may now qualify for preferred rates."

If you're the family breadwinner, it's a good idea to make sure a nonworking spouse or domestic partner also has adequate coverage. The main reason for life insurance is to replace lost income, but a homemaker's work has value, too. "Think about what your partner does in any given month to keep your family functioning," Newman says. "You would have to replace that expense."

Kristen Komer, a MetLife vice president, suggests checking A.M. Best Co. ratings or other indicators of your life insurance company's financial health, to make sure it has the assets to pay your beneficiaries when you die.

"With all the changes that have happened in financial markets, it has never been a more important time to check the financial strength of a company," Komer says.

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