The money you paid for your home is an investment. The homeowners insurance coverage you purchase is the protection for that investment. The amount of protection you purchase will be different than what you may have paid for your home when you bought. The value of your home will change throughout the years. Inflation, upgrades, and improvements will all play a role in how the value of your property changes.
How Do You Change the Home Value of Your Policy?
Don’t underinsure your home. It’s important to review your policy from year to year. If you find that the value of your home has increased, talk to your agent to find out what you need to do to increase your coverage. Be aware of any improvements you have made, and report them.
How Do Insurers Set Home Value?
Insurers set the value of your home based on its location, age, how many people live in the home, and how much it will cost to repair or replace your home if it is damaged by a covered peril. The current market value of your home will also be included in the calculations. Look closely at the numbers before asking to adjust your coverage amounts.
Why Do Dwelling Values Go Up?
Dwelling values can rise for many reasons. The rate of inflation is one of the biggest reasons. Insurance inspections and the potential cost for repairs or reconstruction can also cause the value to go up. If the cost of building materials and workmanship begins to rise, those costs will be factored into the value of your home.
What If You Don’t Agree with the Insured Value?
You buy insurance to protect your home and possessions. When the underwriters put together your policy, they set the insured value of your home. If you disagree with the amount they have decided on, you can talk to your agent about having it adjusted. Put your reasons down in writing and give them to your insurance agent. If everyone agrees, your policy will be adjusted.
Changes for Inflation
Insurance companies know how inflation works. Many carriers include an inflation clause that will adjust the payout for damages if inflation has increased to the point where it will have a substantial impact.
Are There Ways to Negotiate the Insured Value?
You don’t have to agree with the value quoted by your insurance agent. Go over their calculations and do a little comparison shopping. It’s also a good idea to hire an independent appraiser who can give you a second opinion on your home’s value.
What Are the Coverage Requirements and Policy Types?
Guaranteed replacement cost means that your policy will replace your home at 100% of the value. Replacement costs will only pay out only what the home is insured for, even if it isn’t the total replacement costs.
What Other Chances Can You Expect If You Increase or Reduce Your Insured Value?
The coverage amount for your personal belongings may also change if you adjust the total value of your homeowners policy. Your items may be more valuable than you think. Purchasing a supplemental policy to cover antiques and other collectibles may be needed.
Are There Other Ways to Save on Insurance Costs?
There are many ways you can save on homeowners insurance costs. Installing a security system and privacy fence are just two ways you can lower your monthly premiums. Reducing your premiums and increasing your deductibles will also help.
If you have questions on how your insurance carrier values your home, contact our agents here at Jack Stone Insurance Agency. We can help you determine the value of your home and how much insurance you need to fully protect your home and belongings.