Take The Time Now to Review Your Homeowners Insurance

Trying to get just the right amount of homeowners insurance for your house and possessions seem like a difficult task. If you underinsure your home and suffer a devastating loss — flood, fire, theft — then you risk not being able to return to the lifestyle you’ve worked hard to achieve. Yet if you over-insure, you’re throwing money away every year on unnecessarily high premiums.


All homeowners insurance isn’t created equal. That’s why it pays to review your coverage periodically to ensure your policy meets your evolving needs. Begin by understanding the types of coverage available.

Actual cash value coverage reimburses you for the value of your home based on its current condition. If your home was built 10 years ago, you’d receive only the depreciated value of decade-old windows, cabinets, appliances, and so on. Most insurers recommend the more comprehensive replacement cost coverage. With it you’ll be reimbursed for the amount it will cost to rebuild your home like new with the same kind and quality of materials. Depreciation doesn’t factor into the settlement equation.

To get the full benefit of replacement coverage, you need to purchase enough insurance to cover the total cost to rebuild your home, excluding the value of the land. Many people make the mistake of insuring at the market value. But the amount you could sell your home for today isn’t necessarily the same as how much it would cost to rebuild.

Be sure you’re also insured at the right value for your home’s contents and for personal liability. Most insurance polices provide only actual cash value on contents. To get replacement cost coverage, you’ll need to purchase an endorsement. If you have valuables not covered by your policy—silverware, jewelry, furs—purchase endorsements for those, too.

Many people pay no attention to the liability coverage limits in their policies. If you have a dinner party and a guest falls down your front steps, you don’t want to be underinsured.

If you’re concerned about increasing your premiums by adding endorsement after endorsement, ask whether you can save money by splitting your deductible, paying a higher amount for certain claims and a lower amount for others. Bundled endorsements can save you a few bucks, but only if you require them all.

Make sure you have the right coverage for you, your family and your home!