A lot of people ask why their homeowners’ policies “go up” every year. One factor is the amount of coverage for the dwelling (Coverage A limit)—homeowners’ policies have inflation guard built in so that their dwelling coverage limit automatically increases each year. This is helpful so that if you bought a house in the 1980s, you’re not insuring it for the same amount in 2012. However, this can also lead to clients being over-insured, since inflation doesn’t necessarily move in a straight line, upwards at 6%. To fix this, we run a cost estimator with the insured to calculate the current amount needed to insure their home appropriately. It takes about 10 minutes and we go through all the details of their home to determine how much it would cost to rebuild their home. Then, if needed, we can reduce the amount of coverage.
If you’re worried about your costs or have questions about a price change in your insurance policy, it’s always best to contact your agent. Running a cost estimator, or something of that nature, is a great way for them to do a check-up on your coverage. Talking with your agent can help you get a better your understanding of your insurance coverage, its cost, and ways to save.