1 Reason Insurance

Leadership Through Service

  • About
    • Meet Our Agents
    • Partner Insurance Companies
  • Personal Insurance
    • Car Insurance Quote for Personal Auto
    • Boat Insurance
    • Home Owners Insurance Application
    • 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
    • Rental or Vacant Properties
    • Workers Compensation in Wisconsin
  • Blog
  • Contact 1 Reason Insurance
    • Contribute As Guest Author
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

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  • Outdated policies that are not adjusted for inflation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).

Categories: Home Ownership, Homeowner's Insurance

1Reason Agencies

What clients have to say:

Mike T. "I started a business last year and Robert responded to my inquiries immediately, and was extremely helpful and knowledgeable as to the type of insurance coverages I would need to get started. Now its been a year and he now carries All of my coverages! Absolutely the most hands on agent I've ever worked with but hands down the friendliest! I can call him anytime and never feel rushed and not only that but he responded while on a family vacation. I believe in relationships in business and so does Robert by the way he treats his customers. I have a true friend in the business, thank you Robert!"


Lynn R. "Bob is very knowledgeable and has always done a great job explaining different aspects of coverage. He is very accessible and looks out for what is best for the consumer. We highly recommend him!


Justin T. "Excellent agent, always available for answers to insurance related questions. Bob, is the person most people strive to become. Without a doubt, a great person!"


Sebastian T. "I can not begin to tell you how pleased I am with 1 Reason Insurance ! Their responding services is friendly and complete. For the services my company offers to the public it is sure nice to know that we are covered for a reasonable fee. Just having (1 R I ) 1 Reason Insurance there is such piece of mind ! Their insurance plans are strait to the point and easy to understand.
Thanks for the great service 1 Reason Insurance !"


Jeff H. "Very nice and cares about the customer! He was literally the reason why i chose him over other companies for my insurance"

Categories

  • Bonds
    • Performance Bond
  • Bookkeeping
    • Business Taxes
  • Business Marketing
    • Webhosting
  • Car Insurance
  • Commercial Auto
  • Commercial Insurance
  • Court Cases
  • Cyber Liability Insurance
  • Employment Opportunities
  • Employment Practices
  • Flood Insurance
  • Home Ownership
  • Homeowner's Insurance
  • Insurance Companies
    • Insurance News
  • Insurance Terms
  • Investing
    • Finance & Insurance News
  • Life Insurance
  • Non Emergency Medical Transportation
  • 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
  • Uncategorized
  • Worker's Compensation

Recent Posts

  • Using ChatGPT Can Help Your Business Grow By Helping You Write SEO Friendly Content For Your Website
  • Buying Homeowners Insurance In Wisconsin
  • Starting a Michigan Taxi or Non Emergency Medical Transportation Business Is Expensive Because of Regulations
  • Armada Hoffler Announces Quarterly Dividend
  • LGI Homes Reports October 2022 Home Closings
  • Regency Centers Reports Third Quarter 2022 Results
  • Global System Dynamics, Inc. Announces Sponsor Funding of Initial Three-Month Extension to Complete its Initial Business Combination
  • Opendoor Announces Third Quarter of 2022 Financial Results