Don’t Lower Policy Limits

We’re all looking for ways to save on insurance, but reducing the amount of insurance on your home is not the way to go.

While real estate values have dropped, the amount of coverage on your policy is not reflective of the real estate value, but rather the actual cost to hire a contractor to rebuild your home with new materials. In 2008, despite the downward trend in the economy, home repair costs increased four percent. It is generally more expensive to reconstruct a damaged home because of the cost of removal of damaged materials and the need to work around existing landscaping, power lines and other structures not damaged. Building experts say it costs up to 30 percent more to rebuild a house than to build it from scratch.

If you do anything, consider raising your deductible to as much as a $1000 a year. This will have a larger impact over time.