Some of my clients have recently been asking me if they could lower their coverage on their home because their home has decreased in value. I always take the time to review their insurance coverages with them and make sure we have all of the correct details of their home in the policy and if it ends up changing the reconstruction cost to a lower amount then thats okay, but most of the time it stays the same or even increases.
According to many sources out in the insurance world, it is NOT a wise idea to lower the reconstruction cost of your homeowners insurance. Although it seems like the right thing to do because of the decreasing value of the home, the homeowners insurance coverage is based on the amount to reconstruct your home or replace, not its market value. In fact the cost to rebuild your home now is probably more than when you first purchased your home because the cost to manufacture materials and ship them to the place of purchase has risen along with everything else.
The main reason most people want to lower coverage is to lower the premium that they have to pay every year but there are other ways you can save money. If your company offers multi line discounts (auto/home/life), consider getting a quote on the other lines and you may find that you will get a better deal on the other line of insurance along with lowering your current policy premium. I also recommend to my clients to increase their deductible to lower the premium, this way you take on a few hundred or a thousand more of the risk on your end rather than having to pay out many thousands out of your own pocket if you dont have enough coverage on your home.
If you would like a quote or more information on homeowners insurance, please dont hesitate to contact my agency and we will make sure you and your family are covered properly in the event of a loss. Thanks for reading my blog.
Jonathan Ekno
www.EknoInsurance.com
714-257-2517
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