Reducing Property Insurance

Posted in Home Insurance , Save on Home Insurance

September 16th, 2009

If you’ve noticed that market values have lowered in your area and are considering lowering your property insurance, you might not want to act just yet. While it’s natural to want to reduce the cost of your insurance to match your home’s newly-lowered market value, if you move forward without knowing all that your insurance truly covers,you might be digging a financial hole that’s difficult to climb out of.

One reason this is true is because it costs a great deal to rebuild a house. So if you find that you need to make major repairs to your house, the cost of tearing down and building again can cost an arm and a leg – and these costs are not reflected in the market value. In other words, as you price your property insurance, it should not just incorporate market values for your area, but also the cost to rebuild in the event that something tragic occurs.

However, before you dive in and start determining the costs, it’s good to sit down with your agent to help make these determinations. This way, you can ensure that you’re making the most cost-efficient decisions regarding the protection of your most valuable asset.

Saving on Home Insurance

If saving is a huge priority for you right now, there are some ways – other than reducing the amount of property insurance coverage you carry – that can lower costs:

• Evaluate Your Credit. It is well known that a credit score is a huge factor in insurance rates. So if you know that you’ve cleaned up your credit recently and have lowered your score, it’s a good idea to talk with your insurance company about repricing your coverage.
• Raise Your Deductible. Another idea that you might consider to lower the cost of your coverage is to choose a higher deductible. The higher your deductible, the lower your premium will be.
• Seek Discounts. Many insurance customers don’t know that if they purchase more than one type from the same company they can receive discounts on all of them. This could help to lower your property insurance premium.

It may be incredibly tempting to reduce your property insurance when you see market values lowering in the area. But if you remember that market values don’t tell the whole story, you can make a better choice insurance-wise. If you decide to go forward with reducing your coverage, make sure you have enough to at least rebuild your house in case it is destroyed.