Property values are very important, and they can be affected by a number of things. But one of the questions that comes along with the rise in property values is whether homeowners insurance should fluctuate along with those values.
Do you need to run to the insurance agent everytime Zillow or Redfin says your home’s value went up by a few bucks?
Well, probably not – but what about large changes in your tax assessment from year to year?
What if the appraised value of your home rises by $10,000? What if the homes in the neighborhood around you are suddenly selling for more than you paid?
That might be something to consider.You can't always get insurance that covers every little thing in life, but having homeowners insurance is one of the best ways to protect some of your largest investments Click To Tweet
You can’t always get insurance that covers every little thing in life, but having homeowners insurance is one of the best ways to protect some of your largest investments. Your house and its contents are the majority of what you own. These are items you have worked for, and in many cases, are still paying for.
With that in mind, you’ll want to make sure all of those things are taken care of, and that they offer you everything you need in order to be financially secure. That’s where insurance comes in. Yes, you can go without it if you don’t have a mortgage. But do you really want to? Really? It’s much safer to have coverage, and having the right amount matters.
If you have too much insurance you can actually pay a lot more than you need to from year to year. Your house is covered, but you’re overpaying by a lot and that’s not good for anyone. Too little? Well, you’re just out of luck if your house is totalled.
There are plenty of things that could wipe out a house, and you can sleep better at night knowing you’re financially protected from them. Insurance won’t stop a fire from starting, but it may help you financially when you have to replace everything that got crispy in the process.
DON’T OVERLOOK THE IMPORTANCE OF INSURANCE, AND THE IMPORTANCE OF HAVING THE RIGHT AMOUNT OF COVERAGE.
Don’t overlook the importance of insurance, and the importance of having the right amount of coverage. Talking to your agent once a year to make sure you’re still doing the right thing should be enough. However, if your home’s value suddenly shoots up overnight, giving your agent a call isn’t a bad idea. That way you can get the right advice, and you’ll know whether you should up your coverage amounts. Of course, the value of your house could come back down later, too. If that’s the case you’ll need to have another chat with your agent, or you might be paying too much.
In short, your coverage is tied to what it would cost to replace your home. If the cost of the materials hasn’t gone up that much, you’re good. If the price to rebuild the house rises significantly, then the insurance you have now may not be enough.
When house values rise the materials and labor often follow suit. That does mean you should raise your insurance amount when you see those kinds of things happening. It should only be for large swings in price, though, because a few dollars here or there isn’t going to make the kind of difference that would affect an insurance claim outcome.