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Homeowners Insurance and Home Value

Why Decreasing your Home Value on your Homeowners Insurance May Not Save You in the Long Run

When scrounging to save every penny you can, it may seem like Homeowners Insurance and Home Valuea good idea to decrease the value of your home on your homeowners insurance. However, doing so could have dire effects; if the policy limits on your homeowners insurance are insufficient, the price to repair or replace your home in the event of a loss could exceed those limits, even if the market value of your home has decreased recently.

Property Insurance Considerations

The market values of homes are declining, while home repair costs are escalating. According to the Los Angeles Times, it may cost as much as 30 percent more to rebuild parts of an existing home as compared to building a new home. Rebuilding existing homes always includes additional costs, such as demolition, removal, and working around existing structures, landscaping, and power lines.

Homeowners Insurance and Home ValueWhen remodeling your home, you should contact us to discuss the details of your remodeling, as the improvements can add value to your home, and should be considered in the overall replacement cost of the home.

The limits on your homeowners insurance are there to protect your family in the event of a catastrophic loss, such as a fire, destruction of property, etc. Reducing the replacement cost of your home on your policy could make a loss much more costly in the end if your home is not insured to the correct value. Here are some tips to save money, while still remaining protected on your homeowner insurance:

  • Increase your credit score by paying bills on time, and avoid writing bad checks. Insurance companies view poor credit scores as showing a lack of responsibility and a greater insurance risk.
  • Avoid filing small claims with your homeowners insurance. Use your homeowners insurance for bigger claims that you cannot recover by yourself.
  • Increase the deductible on your homeowners insurance to reduce your monthly premium. According to the Insurance Information Institute, increasing your deductible from $250 to $500 will cut costs by 12 percent! If you increase your deductible to $1,000 you could save as much as 25 percent on your home owners insurance. Finally, if you increase your deductible to $2,500, you could save 30 pecent!
  • Consider buying multiple lines of insurance from the same insurance carrier to receive discounts, such as your automobile, life and homeowners insurance
  • Install smoke alarms
  • Update your exterior locks to deadbolts, and/or consider installing a home security system

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