The beginning of the year is a good time to review your insurance policies to make sure you have adequate limits and coverage.
Values may have depreciated with the economy. If there were a total loss of your home, it may not cost as much to replace today as it would’ve this time last year.
Insurance companies use a cost per square foot to determine what they would need to pay out to replace your home. If you have a 2,500-square-foot home and the insurance company is paying $100 a square foot, your limit would be $250,000.
If the insurance company changed it to $90 a square foot, your limit would be $225,000. You would see a savings in premium based on the lower limit of coverage.
If you don’t agree with the limit of coverage on your home, another option is to get an independent appraisal of your replacement cost.
Insurance carriers generally honor these reports and will charge you based on the limit that you request.
Another area to review is contents coverage. Have you bought or sold any big-ticket items throughout the year? If you purchased electronics for your new home theater or specialized equipment for a hobby, you may want to adjust your limit of contents coverage to make sure it is adequate. Likewise, if you have sold something of substantial value, you may want to have your contents coverage reflect the decrease in limit.
This is where your insurance agent can shine and help you determine the best choice in coverage for your needs. Your agent can tailor your coverage to your needs.