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Most insurance policies come with a solid foundation of coverage. So when something is labeled optional, it is easy to assume it is extra, unnecessary or something you can safely skip. But in reality, optional coverages are often designed to fill common gaps in standard policies. They exist to help tailor protection to how you actually live, drive and use your property, and some are worth a closer look than many people realize.

How Do You Know If You Need Optional Coverages?

One helpful place to start is by reviewing what coverage is provided in the base form. Once you understand what is already covered or excluded, you can evaluate your needs and identify optional coverages in areas where additional protection may be needed.

Next, start thinking about the potential financial impact of a loss. Would a specific loss create a
significant burden for you or your family, or could you manage the cost comfortably out of pocket? Some losses may be minor, while others could have a much bigger effect depending on your lifestyle, assets and budget. Working with your independent agent to estimate replacement or repair costs can help you better understand where optional coverages may make sense, and how much coverage to consider.

It’s also worth asking whether you would replace the item at all. If it’s something you wouldn’t replace after a loss, an optional coverage may not be necessary. But if it’s something you value, use often or would want to replace right away, it may be worth a closer look.

Because everyone’s situation is different, optional coverages are rarely one-size-fits-all. Taking time to reflect on what you own, how you use it and what risks you may face can make conversations with your local independent agent more productive and help reduce the chance of coverage gaps.

Optional Coverages Worth Considering

Not every optional coverage will make sense for every situation, but a few tend to be worth a closer look for many people.

Loan/Lease Gap Coverage

When you drive a new car off the lot, it typically starts losing value. That matters because the balance on your loan or lease may no longer match what the vehicle is worth.

If your vehicle is totaled, the amount owed may be more than its current value. Loan or lease gap coverage may help cover that difference, reducing what you might otherwise have to pay out of pocket.

Check out our blog post: How Gap Insurance Can Protect You When Your Car Depreciates.

Guaranteed Home Replacement Cost

Replacement cost is the amount it would take to rebuild your home to its pre-loss condition after a total loss, such as a fire or tornado. An agent calculates this amount using a replacement cost estimator, which considers factors like construction style, square footage, roof shape and any recent updates or upgrades.

Because replacement cost estimates are based on information available at the time they are calculated, it’s important to let your agent know about home improvement projects as they happen. This helps ensure your coverage reflects the current characteristics of your home.

Even with regular updates, coverage needs can change over time. Guaranteed Home Replacement Cost is an optional coverage designed for situations where, for a variety of reasons, a home’s coverage amount may not be adequate at the time of a loss. This coverage can provide a full replacement of your home if the coverage limit is too low.

To learn more about replacement cost value, read our blog post: Your Home Got a Makeover. Now It’s Your Policy’s Turn.

Water Backup of Sewers or Drains

When a sewer or drain backs up, the resulting water damage can affect areas of a home like floors, walls, furniture and electrical systems. Cleanup and repairs can add up quickly, especially when finished areas of a home are involved.

Water Backup coverage is an optional coverage available with a range of limits. Choosing an appropriate limit can help address potential damage from this type of event and provide additional peace of mind.

Home Cyber Protection

As more people use technology in their daily lives and store personal information electronically, cyber-related risks have become more common. Home cyber protection is an optional coverage designed to help address certain costs that may arise after a cyber incident.

This coverage may help pay for professional services to assist with recovering compromised data, restoring device functionality and working with legal professionals to help review and respond to a personal data breach. It may also help with certain financial losses related to fraud, including identity theft, and provide resources to help manage situations such as extortion or other impacts affecting those involved.

Special Personal Property

Personal belongings can be lost, damaged, or misplaced in unexpected ways. In addition to standard personal property coverage, policies may offer extra protection in two ways: replacement cost coverage, which helps pay for new items instead of depreciated value, and scheduled coverage for specific valuables like jewelry, fine art, or boats that may need broader protection.

Where to Start if You’re Unsure

After looking at a few optional coverages, you might still wonder which ones matter most for your situation.

A good first step is to review your current policy and note what coverage you already have. From there, you can review your needs with your independent agent to determine what optional coverages would be best suited for you.

If you’re considering changes, an independent agent can help walk through available options and answer questions before you decide whether to add anything. The goal isn’t to add more coverage than you need, but to understand what’s available so your policy reflects what matters most to you.

Insurance isn’t one-size-fits-all, and optional coverages reflect that. Reviewing your policy with an independent agent can help clarify which options may be worth considering, and which ones may not, based on your individual needs.

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Disclaimer: This article is not expert advice. The analysis of coverage is in general terms and is superseded in all respects by the Insuring Agreements, Endorsements, Exclusions, Terms and Conditions of the Policy. Some of the coverage mentioned in this material may not be applicable in all states or may have to be modified to conform to applicable state law. Some coverages may have been eliminated or modified since the publishing of this material. Discounts may not be available in all states. Limitations and conditions may apply. Premiums will be based on benefits chosen. Please check with your local Independent Auto-Owners Insurance Agent for details.

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