According to several news agency and trade organizations underinsured homeowners are increasingly common. Some sources have reported 2 in 3 homes are underinsured and other sources site 60%. Why does this matter and how does it impact you?
The only reason that matters: Financial disaster if catastrophe strikes.
How does this happen in the first place? Remodeling your home and not adding the additional value to your policy, getting just enough insurance to cover your mortgage, or the home’s insurance value was lowered to save money on premiums.
This is why it so important to use an insurance agent you can trust. Saving money on premiums always sounds great but if those savings come at the cost of reducing legitimately needed coverage this can cost you big in the long run.
For example, you purchase a home for $150,000 (market value) it will cost $200,000 to rebuild it from the ground up including cleaning the site of debris from the old home. You got a mortgage for $80,000 because you saved up and had a sizable down payment.
If you underinsure your home by undervaluing the property this could save $500 per year for example. Over 10 years this adds up to $5,000 in premium "savings". Over those 10 years you made improvements to the home, building and labor prices have gone up, market value has increased and your agent hasn’t bothered to consult with you about the value of your home.
The home you purchased for $150,000 and insured for $80,000 is now worth $175,000 and the rebuild cost has risen to $225,000. You only borrowed $80,000 so you insured ie set your policy limit at $80,000.00. Life is good but then your home is destroyed by a tornado.
How will you replace or find another home that is comparable to your $175,000 home for $80,000? You saved $5,000 in premium and gave up $145,000 in insurance coverage. In addition, you acquired more stuff over the years, put up a fence and shed and that is underinsured also.
In this example, the premium savings don’t justify the risk.
We work with our clients using multiple carriers to find the best coverage and value. Our knowledge about our carriers helps us find you the best value.
We know what options and discounts each carrier offers, what risk profiles fit within their appetite. Working with you we help you decide what carrier is the best fit. We want to offer the best value but not sacrifice coverage.
Because we are and independent insurance agency representing multiple carriers we have the ability to continually make sure you have the best carrier, coverage and premium in the long run. We dont want to just make a sale. We want to build a long lasting relationship.
If you want the best agent and coverage click the link below!
