Don’t Cut Home Insurance, Experts Say

Many home owners are contemplating reducing their homeowners insurance coverage since their property’s value has dropped. But experts warn that’s not a good idea and could leave home owners with insufficient coverage if a disaster ever strikes.

“The market value of your home and its insurance value can vary widely because they are based on different assumptions and calculations,” according to an article in the Baltimore Sun. The insurance value is based on what it would cost to rebuild the house, not on what you paid for it.

As such, even though housing prices have dropped in many markets, rebuilding costs have not.

For home owners looking for savings, they might instead consider increasing their deductible. For example, increasing a deductible to $1,000 from $500 could lower the premium by 25 percent.

Source: “Don’t Cut Home Insurance,” Baltimore Sun (March 13, 2011)

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About dherries
Dave and Sally Herries and The RealtyColorado Team - Real Estate Broker serving the metro-Denver area. Offering properties in urban, sub-urban and rural areas. Our mission statement is "Enriching lives through real estate."

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