One of the unfortunate side effects of the sub-prime lending meltdown is that home prices have started to fall in the area and as a result you may be able to reduce the dollar amount of your coverage and save yourself a few dollars. If your home cost you $500,000 and you’re insured for that amount, I don’t believe there is much benefit to you having half a million dollars of coverage if your home is only valued at $400,000 (for example). If, however, you are covered for replacement cost, as opposed to value, this is something that doesn’t really apply to you.
So, if you’ve recently had a home appraisal and saw that your value went down, perhaps consider getting the amount of insurance correspondingly reduced. One caveat though, you may not be saving enough money to make this idea really work for you and you might not want to reduce your insurance coverage “just in case.”
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