On this blog, we've discussed the risks of protecting your home with too little insurance coverage. Incurring costs you can't reasonably afford in the event of catastrophe can lead to massive debt and a crisis of personal finance. But on the flip side of underinsured homes are residential properties with too much coverage. Rather than delivering a punch to the gut when a home is destroyed, over-insuring your home can mean wasting money on a monthly basis, for coverage you may never see even if your home is a total loss.
Granted, there is no perfect figure for the cost to rebuild a home from scratch. At least, not until the rebuild is finished and all the receipts have been counted. But expert appraisers who determine a home's valuation consider all the permutations and incidentals of a worst case scenario. It's better to be safe than sorry when buying coverage for your biggest investment, but is it possible that your policy is just excessive?
"Trying to get just the right amount of homeowners insurance for your house and possessions may leave you feeling a bit like Goldilocks searching for a chair, a bed, and porridge that are just right," writes G.M. Filisko of House Logic. "…If you overinsure, you're throwing money away every year on unnecessarily high premiums."
Like preventing underinsurance, updating an inaccurate home valuation is as easy as getting a new appraisal. If you're concerned that your premiums and incidental coverage are too high, working with your insurance provider to arrive at a new fit can reduce annual costs, freeing up resources that could be better invested in home improvements or other expenditures.