FacebookTwitterGoogle +Linkedin
715-598-9924

1Reason Insurance

Caring for Your Financial Well-Being

  • Questions & Answers
  • Contact
    • Blog
    • About
      • Partner Insurance Companies
  • Terms and Conditions
  • About
    • Meet Our Agents
    • Partner Insurance Companies
  • Personal Insurance
    • Auto Insurance
    • Boat Insurance
    • Home Owners Insurance
    • Life Insurance Quotes
    • Motorcycle Insurance
    • Personal Umbrella Insurance
    • Renters Insurance
    • RV Camper Insurance
    • Snowmobile Insurance
  • Business Insurance
    • Commercial Auto Insurance
    • What is General Liability Insurance
    • Health Insurance
    • Rental or Vacant Properties
    • Travel Insurance
    • Workers Compensation in Wisconsin
  • Blog
  • Contact
Home > Home Ownership > Home Insurance: Finding The Sweet Spot Between Too Much and Not Enough

Home Insurance: Finding The Sweet Spot Between Too Much and Not Enough

Posted on: July 17, 2018 By: Anthony Gilbert

Facebooktwittergoogle_pluspinterestby feather

Having a disaster, such as a hail or a windstorm, hit your home, is the last thing a homeowner may expect. Homeowner’s insurance is designed to minimize the costs of those disasters and other unexpected issues. Every plan is not created equal, however. Homeowners need to make sure they have the right amount of insurance coverage and understand the dollar limits of their homeowners policies. By following a few simple tips, consumers can get their homeowners insurance just right.

Why Some Homeowners may Be Under-Insured

Although homeowners may carry insurance on their homes, not everyone has the right amount of insurance coverage. All too often, homeowners become upset after they discover that their policies may not cover the repairs and replacement costs after disaster strikes. There are several reasons homeowners may not have enough coverage, including:

  • Outdated policies that are not adjusted for inflation
  • Recent improvements without expanding coverage
  • Failing to note exclusions in the policy

On occasion, people may reduce their insurance coverage to save money, but this might be a financially dangerous proposition. The best protection against under-insurance is to look at the policy details and change them as needed.

Understanding Insurance Limits

There are a variety of numbers homeowners will notice in their homeowner’s policy. When examining their policies, homeowners will probably notice a number called a “deductible.” A deductible is the amount the homeowner will need to pay first, before any insurance monies are paid to the homeowner from the insurance company. Other important amounts to note in the policy include the limit on the amount of liability coverage and a maximum the insurance company will pay to rebuild or replace lost or damaged items.

Homeowners should keep in mind that the maximum amount of coverage may not necessarily be the total they could receive – they may receive less, depending on the claim. Insurance companies use algorithms and other means for determining how much to reimburse a homeowner for particular types of damage.

Also note that many policies also exclude coverage for certain disasters, like earthquakes or floods, unless the policy owner has opted for it specifically. Policies may also not cover certain electronic devices like computers, expensive jewelry, or collections of memorabilia without certain insurance riders. Also be sure and discuss with your insurance agent if you have a home swimming pool or plan to install one in the future, as this may also effect your homeowner’s insurance coverage.

Replacement Value vs. Actual Cash Value

When looking at the types of coverage homeowners may consider, compare the cost of replacing an item to its actual value. Insurance policies often make a distinction between the two.

For example, a new couch might cost $1,000 or more, but an older couch that may have cost $1000 10 years ago that is destroyed in a fire may only be worth $100 in actual cash value. Homeowners who expect that their insurance will pay for replacement could be surprised to learn that they have a policy that only provides for the actual cash value. So instead of receiving $1000 to replace the couch, the homeowner only receives $100 as an actual cash value. As a result, homeowners should consider coverage that offers replacement value over actual cash value.

Finding the Right Balance

No one wants to pay more for insurance coverage that they may never need. However, there are ways to ensure that homeowners have the appropriate insurance without having to skip over the important details. The best thing homeowners can do, is to confirm they have enough coverage. An updated home inventory will assist the homeowner and their insurance agent about what may be in the home that is valuable. Having coverage on items that may no longer be valuable or useful is as bad as not having the right amount of coverage for an expensive item. Finding the right balance is the key.

Adjusting Coverage Periodically

Homeowners may make the mistake of owning a home for several years or even decades, without changing their insurance in any way. Insurance providers rely on the homeowner to tell them about improvements, additions, and purchases that change the coverage requirements. Once a year, homeowners should take a look at their policies. If they need to add coverage, it is better to do it well in advance of the policy renewal period. This review process also gives homeowners a chance to talk to their provider about discounts they may consider. Homeowners could also save money on their insurance premiums, while remaining confident that they have adequate protection.

Being over-insured could cost homeowners in monthly premiums. Having too little insurance may increase a person’s costs dramatically, at the worst possible time. Homeowners have little to risk by analyzing their coverage and asking if their policies provide for problems they may face. This early investment could save both money and stress, in the event of a disaster.

Anthony Gilbert is the owner of The RealFX Group. Tony believes homeowners should be proactive in protecting their investment while making sure to understand where their money is going at all times (and if it’s being put to good use).

Comments

comments

Related posts:

  1. What Happens If A Storm Damages My Roof?
  2. Airbnb Insurance – Know Your Risks Before Renting Out Your Home or Rental Property

Categories: Home Ownership, Homeowner's Insurance

Call and receive expert consulting or click below for quote
Button linked to quote page for commercial insurance quote

Get a Business Insurance Quote

Get_a_Business_Insurance_Quote_Now180x150

Categories

  • Bookkeeping
  • Business Marketing
  • Business Taxes
  • Car Insurance
  • Commercial Auto
  • Commercial Insurance
  • Court Cases
  • Cyber Liability Insurance
  • Employment Opportunities
  • Employment Practices
  • Finance & Insurance News
  • Flood Insurance
  • Home Ownership
  • Homeowner's Insurance
  • Insurance Companies
  • Insurance Terms
  • Life Insurance
  • Payroll
  • Pinewood Derby
  • Real Estate News
  • Rental Property Insurance
  • Retirement & Estate Planning
  • RV Insurance
  • Starting A Business
  • Stock Dividends
  • SuiteCRM Insurance CRM
  • Tips & Advice
  • Travel
  • Worker's Compensation
Party Bus Inside with a wedding party having fun. This party bus is insured in case of an accident

Party Bus Insurance For New Party Bus Companies

December 1, 2018 By Robert Weinstein

Sales Tax Accounting. Money and a calculator, online small business accounting for the self-employed

Business Insurance Audit Letter, Why Did I Get One and Do I Have To Fill It Out?

March 8, 2018 By Robert Weinstein

Party Bus Interior with LED lighting and large music speakers

How To Start a Party Bus Business

December 19, 2017 By Robert Weinstein

$500 Federal Reserve Note, paper money

Hiring a Subcontractor, What You Need To Know For Insurance

September 6, 2017 By Robert Weinstein

Sales Tax Accounting. Money and a calculator, online small business accounting for the self-employed

Self-Employed Contractor Bookkeeping Including Online Accounting Software

July 19, 2017 By Robert Weinstein

Lady typing at computer working on starting a LLC in Wisconsin

Payroll Service for Small Businesses Employers

April 26, 2017 By Robert Weinstein

2017 I-9 – Employment Eligibility Verification Download For New Employees

April 21, 2017 By Robert Weinstein

10 Reasons Why You’re Losing Sales That You Might Have Made

April 14, 2017 By Robert Weinstein

Rental Insurance certificate designation for Robert Weinstein

Landlord And Rental Insurance Designation Five Week Training by Foremost Insurance

December 1, 2018 By Robert Weinstein

Buyers and sellers can record substantial savings on property in today’s market

November 30, 2018 By Staff

CareTrust REIT Announces Director Resignation

November 30, 2018 By Staff

Highwoods Announces Ted Klinck Promoted to President

November 29, 2018 By Staff

Lever joins Beazley’s US marine underwriting team

November 29, 2018 By Insurance Updates

Duperreault praises Bermuda innovation at fintech forum

November 27, 2018 By Insurance Updates

London–Bermuda connections celebrated at BDA forum

November 26, 2018 By Insurance Updates

Recent Posts

  • FMCSA Approves Exemption for Mirror-less Trucks
  • Trucking Insurance Cancelled – We Will Find Alternative Commercial Auto Coverage
  • Non-Emergency Medical Transportation Insurance (NEMT)
  • Retail Opportunity Investments Corp. Schedules Fourth Quarter & Year-End Earnings Release and Conference Call
  • Sammons Financial Group Honored as One of Glassdoor’s 2019 Best Places to Work
  • Duck Creek Technologies Reports 85% Bookings Growth and 30% Revenue Growth in SaaS-Delivered Enterprise Software Solutions for Fiscal Year 2018
  • Griffin Announces Fiscal 2018 Fourth Quarter Leasing
  • RPT Realty Announces the Appointment of Richard Federico to its Board of Trustees
  • Cowan Insurance Group Fills Mid-Market Supply Chain Insurance Gap
  • General Liability, Workers’ Comp, Commercial Auto Insurance, & Payroll Now For Colorado Business Including Cannabis / Marijuana
  • Landlord And Rental Insurance Designation Five Week Training by Foremost Insurance

1Reason, All Rights Reserved

A Veteran Owned Agency

Currently licensed in Colorado, Florida, Illinois, Michigan, Minnesota, North Carolina, Oregon, Texas, and Wisconsin.