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Some people tend to view their insurance policies that arrive in their mail as nothing more than reminders of an annual premium due.

But by systematically stuffing that policy into a filing cabinet for a rainy day, they basically make the assumption that coverage purchased way back when is still adequate for their needs. In reality, life changes quickly and, before you know it, that insurance policy has as many leaks in it as the seeping walls of your newly finished basement.

Here are five important factors to consider when purchasing new insurance or revisiting your existing coverage, according to Marco D’Onofrio, President of Groupe D’Onofrio Assurances et services financiers.

1). Never be under-insured!

If you have finished your basement, built an extension on your home or have made any significant improvements to your property, failure to revisit your insurance policy limits may result in your property being under-insured. Additionally, over time, inflated construction costs alone can leave you deep in the hole for damaged property that was not added to your coverage.

2). Do the math on deductibles

Nobody likes to be out of pocket $500 or $1,000 for anything, let alone something that you are supposedly covered for by an insurance policy. As a result, people tend to opt for the lowest deductible possible when choosing their insurance policies. Considering that the average policyholder only makes a claim every five years, the money saved on premium payments by opting for a higher deductible could very well save you money when it comes time to make a claim.

3). Sewer backup insurance

In 2008, for the first time in Canadian history, water damage claims exceeded fire claims in the insurance industry. The problem is, many people have the misguided belief that their insurance has them covered. Water damage peril coverage does not necessarily protect you against damage caused by backed up sewer drains or road overflows during a heavy rainfall. With potential costs of more than $20,000 for basement sheetrock replacement alone, sewer backup insurance is essential.

4). Tenant insurance

So you lease your living space and thank your lucky stars that the only things you have to insure are your personal belongings. Guess again. Approximately 40 percent of tenants living in leased accommodations on the island of Montreal are uninsured for liability against flooding a neighbouring apartment or causing fire damage to other units. Such actions render a tenant liable and will subject them to the tenacious pursuit of subrogation from the building owner’s insurance company. For as little as $150 per year, tenants can purchase comprehensive liability insurance.

5). Failure to advise of…

Whether you think it makes a difference or not, full disclosure is an essential part of the insurance game. Renovations that result in damage by an uninsured plumber, hazardous chemicals stored in your basement that combust or leaving your home unattended for an extended period of time can result in costly damages that your insurance company will not cover. Even failure to disclose a criminal record, regardless of its relevance to a claim, can leave you uncovered. Always advise your broker of changes to your situation.