I got quite a shock recently when I opened my annual renewal invoice for my homeowners insurance. The price was hiked far more than I believed was reasonable, so it was time to investigate. I understand that the value of my house has increased, and the cost to replace it is significant, should it be a total loss due to some tragedy.
But I felt like I was being taken advantage of, and the automatic raising of the property dwelling limit was getting out of hand. There is no way I believed my house would cost that much to replace in its entirety. I expect my homeowners insurance to go up slightly every year, but the value the house is worth and the amount listed on the policy was too wide of a gap. I want to be sufficiently covered, but by the same token, I don’t want to be paying for coverage I’ll never use.
I researched the price of houses in my area that were for sale and that were similar to my one-story rancher. All were selling for much less than my new insurance policy listed as my dwelling coverage. Now, realize that insurance companies don’t base the dwelling coverage limit on the price of similar houses in your area. They are estimating the cost to rebuilt your entire house. Knowing that, I expected the dwelling coverage figure to be somewhat higher than the cost to buy a similar house. Nevertheless, my policy’s figure was still significantly higher than that, so I still believed I was over-insured.
We all expect costs to go up a little every year, so we may not bother to review policy documents when it comes time for renewal. But when raised a little at a time, we are less apt to take notice. This reminds me of the story of the frog and the boiling pot of water. If a frog is in a pot of water that is put over a fire, the water will slowly get warmer until it is hot enough to harm him, and then it might be too late. But if a frog is put in water that is already hot, he’ll jump right out.
So, I called my insurance company. The representative told me that they cannot lower the price of the dwelling limit, but they would go through all of the ways that I might be able to lower the premium cost. Watch our video to hear some of the points we discussed.
Video References:
Bankrate: Average Cost of Homeowners Insurance in 2021
https://www.bankrate.com/insurance/homeowners-insurance/homeowners-insurance-cost/
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