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There’s too much insurance on my house!

By Scottie McNelly

Many people believe they have too much insurance on their house because they do not owe as much as replacement cost or because the market value of their home is not the same as replacement cost. There are a few things we need to understand: Why should I have replacement cost on my home? The best way for me to answer this is to ask some questions:

  • What do you expect your insurance policy to do if your home suffered damage from a fire or from a pipe breaking or other water damage? Would you expect that your insurance company would clean and remove the debris?
  • Would you expect the insurance company to obtain the necessary permits required by city, county or state? And what if you a building code has changed?
  • Would you expect the insurance company to rebuild your home or repair the damage regardless of the cost to them?
  • How would you feel if they only paid a depreciated cost based on age and wear of them home? That’s what would happen if you do not have replacement cost.

Unless you or someone you know has ever been through a claim or major disaster, these are some items you may not have realized. And if you have been through a major disaster like a home fire or hurricane, you know you can never have too much coverage. It’s also important to know what you are covered for and what’s not covered. Be sure to ask your insurance agent about your policy and coverage’s to help avoid surprises. Review you policies exclusion when you receive the policy. Ask your insurance to help you understand what may be confusing. Remember, your insurance agent is a licensed professional designated to know and discuss your coverage’s.

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