Barbara Novitsky, ABR,ASP,CRIS,CRS, e-PRO,GREEN,GRI,SFR, SRES,REALTOR
From time to time, we all look for ways to reduce our fixed costs. One of the things that you may be considering is a reduction in home insurance coverage due to lowered home sale prices.
STOP!!
I’m not an insurance agent, but do want to share a few tips. Reducing your coverage may end up costing you significant money in the event of a major disaster.
The insurance value of your home and its market value may vary considerably. That’s because they are based on very different considerations.
Insurance value is the cost of rebuilding your house, not the price you paid. Market prices may have dropped, but rebuilding costs have not.
Market price takes your land value into consideration, something ignored for rebuilding cost calculations.
If you want to learn more about this subject, contact your insurance professional and have an open and frank discussion. It’s not only a good idea, but one that may save you from yourself.
There’s also a website calculator at www.accucoverage.com that you might find interesting. Using this website, you can obtain an estimate of your home’s insurance value from Marshall & Swift/Boeckh, the company that provides building cost estimates to the insurance industry. Accucoverage.com charges $7.95 for their report.
Keep in mind that this isn’t a single shot deal. If you make major renovations/changes to your home, it’s a good idea to recheck its insurance value with your insurance professional.
Homeowners insurance premiums are typically quite reasonable reflecting major improvements. The place to save money is not on insurance coverage; rather, on deductibles. Moving from $500 to $1,000 as a deductible may avail you a good savings chunk. Check it out with your insurance professional.
