BALTIMORE – March 22, 2011 – Many homeowners are considering a reduction to their homeowners insurance coverage since their property’s value has dropped. But experts warn that’s not a good idea and could leave homeowners with insufficient coverage if disaster strikes.
Market value of a home is not the same as insurance value, and each dollar figure relies on different assumptions and calculations. The insurance value is based on what it would cost to rebuild the house – not on what you paid for it. Even though housing prices have dropped in many markets, rebuilding costs have not.
For homeowners 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)
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
Market value of a home is not the same as insurance value, and each dollar figure relies on different assumptions and calculations. The insurance value is based on what it would cost to rebuild the house – not on what you paid for it. Even though housing prices have dropped in many markets, rebuilding costs have not.
For homeowners 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)
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
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