Homeowner’s Insurance Coverage

In the current economy, the value of homes has gone down in many areas. You may have noticed, however, that the cost of your homeowner’s insurance continues to rise. It pays to look at your policy annually to determine if the amount of your coverage is accurate, and if there are ways to reduce the amount of money you are paying for insurance.

Most policies have an automatic cost of living increase every year, and the value which the insurer assigns to your home may no longer be accurate. This value is based on how much it would cost to replace your home on its current lot. In today’s economy, the value of your home may have decreased by 75% or more. If you don’t think it would cost as much to replace your house as the insurer quotes, or you are at the point where you need less house, you could ask them to lower the amount of coverage. Be careful with this, though. Even though your house may be worth a lot less, to rebuild it may cost a lot more than you think.

Another area which you can look at is the insurance on the contents of your house. If you live simply, and don’t have a lot of valuable possessions, you may be paying a lot more than you think to insure them. Or, you may find, that if you had to replace something, you could get by with a used item, or even go without. Take a tally of the contents of your home, and try to come up with a figure for how much it would cost to replace them. Compare that to your insurer’s figure, and reduce or increase your coverage accordingly.