Insurance likely inadequate as home values ​​rise


The good news is that your home has never been more valuable. It takes some of the sting out of the fact that the stock market is down and you now have to work 10 years longer than expected.

But be brave. Soaring house prices are real. In 2021, the average U.S. home appreciated 17.1%, a record high, according to CEIC Data, a market research firm that has tracked house prices for 30 years. This is quite something considering that the average annual growth is 5.3%. So go ahead, celebrate your housing boom and get your happy dance out of your system, because now comes the bad news:

If your home has gone up in value, you’re probably underinsured.

“Along with housing prices, construction costs have also increased,” said Laura Adams, personal finance and insurance analyst at Clearsurance, an online platform that helps consumers shop around and compare insurance plans for find the best value for money. “You’re only covered to rebuild your home for the amount of coverage you have, and with building costs rising, many people don’t have enough home insurance coverage to do that.”

Shame. I know. It’s so boring. You hate paying for insurance, and so do I. The last thing you need is another problem to lose sleep over. But you’d be really upset if your house burned down and you found out you were only covered for what you said was replacement value when you bought the policy, back when the house was worth much less and construction dollars went further. Sigh.

However, before you stick your head in a pot of vodka, Adams has a better idea. While you’ll probably need to contact your carrier to make sure your home coverage is enough to cover the full replacement value of your home, which means your rates will go up, there are also some strategies you can take to lower your insurance costs. assurance.

“The rate you pay for home insurance depends on many factors,” Adams said, “including types and amounts of coverage, location and home features.” She then offered the following 13 often overlooked ways to reduce the cost of home insurance, even if you need to increase coverage:

◼️ Replace old plumbing. If you update your plumbing and repair leaky pipes, you reduce the risk of major property damage from a broken pipe. If you upgrade your plumbing, let your insurance company know.

◼️ Replace worn electrical components. Since degenerated electrical systems are a leading cause of home fires, installing a new electrical system reduces your fire risk and could also reduce your premium.

◼️ Get a new roof. Household damage from a leaky roof is another common and costly claim, so insurance companies reward those with new roofing. When we replaced our worn roof last year, our insurance premium dropped by about 10%.

◼️ Fortify your windows against disasters. Enhanced features such as storm shutters and impact-resistant windows help protect homes from high winds, hail, heavy rain, flying objects and other weather-related disaster damage.

◼️ Install a security system. Many smart home devices are helping people save money on their policies and avoid insurance claims. Some of the technologies that can result in insurance discounts include professionally monitored security systems, security surveillance cameras (including doorbells with cameras), burglar alarms, and water sensors that trigger a power cut. water in the event of a pipe break.

◼️ Gather your coverage. Ask your agent to buy more than one type of insurance policy from the same insurer or to buy what is called a multi-line policy. Combining your home and auto or life insurance with the same insurer will often allow you to achieve substantial savings.

◼️ Check affinity discounts. Find out if your employer, or any professional or alumni organization you belong to, has a relationship with an insurance company that offers a discount you may be eligible for.

◼️ Maintain good credit. Having good credit will save you money on insurance in many states.

◼️ Increase your deductible. Generally, the higher your deductible, the lower the premium.

◼️ Play the age card. Retired homeowners over 55 can often qualify for lower rates.

◼️ Do not smoke. Smokers often pay much higher insurance rates.

◼️ To marry. Married owners generally pay less than single owners.

◼️ Shop, then be loyal. When looking for home insurance, shop around and compare plans, discounts and rates. Once you’ve chosen an insurer, stick with the company. Loyalty is often rewarded with lower premiums.

Marni Jameson is the author of six books on home and lifestyle, including “What to do with everything you own to leave the legacy you want”.


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