If you’re a homeowner, chances are your house is worth less than it was five years ago. But you could still be paying more to insure it.
Despite the deep housing bust of the last few years, the cost of rebuilding a damaged home — in other words, what you pay insurance for — has not changed much, according to industry experts.
That means that unless you have reduced coverage or increased your deductible, chances are you are paying as much or more to insure your home as before the housing bust.
In this topsy-turvy housing market we’ve seen in the past few years, it’s possible that the cost to rebuild your home is actually more than you could sell it for. The insurance also usually must be enough to cover how much is owed on a person’s mortgage, even if that is more than the value of the home. These days, it’s also possible you owe more on your house than you could sell it for.
Still, experts say that doesn’t mean you should accept a big jump in your insurance rate when you get your next bill. After all, a big factor in rate increases could just be the inertia of simply accepting the new premium each year.
You should look carefully at your bill to see why it has increased. You also might want to check if you can reduce your rate by making home improvements such as adding a better fire prevention system, or making lifestyle changes such as stopping smoking.
It’s also a good idea to shop around to see if another provider can get you the same coverage for a lower price.
A 2008 survey of Consumer Reports subscribers found that about half of those who switched insurance carriers in the prior four years were paying less for coverage.
While a really great insurance rate may be alluring, you should be cautious in accepting a new policy purely based on price. Check consumer websites and your state department of insurance website to make sure that your insurance carrier will treat you well in the event of a claim.
When you’re buying insurance, all you’re buying is a promise.