Can you over insure your home?

We are all familiar with the classic fairytale Goldilocks and the Three Bears. The little girl, Goldilocks, stumbles across the three bears’ house. Upon entering, Goldilocks discovers three bowls of porridge. She decides to give the porridge a taste, but the first bowl is too hot, and the second one is too cold. The third bowl, though, is just right. 


Buying insurance is a very similar experience. You don’t want too much, and you don’t want too little. You want just the right amount. 


But what is the right amount of home insurance? 


Home insurance is critical to own. No matter where you live, additional coverages such as flood insurance are valuable to have since singular homeowner’s insurance doesn’t cover such damages. However, you can over-insure your home. 


Over insuring your home can result in you throwing hundreds of your hard-earned dollars away each year. Make sure you don’t get tricked into paying an extraordinarily high and unnecessary premium by meeting with your agent. It is vital to sit down and discuss your policy with them. Have them sit and explain any conditions and openly communicate your needs and current assets. 


It can be just as easy, if not easier, to under-insure your home.  


So, how do you find the perfect balance? 


Instead of insuring your home for the market value, like many people do, insure it for the total cost it would be to rebuild it. Considering your unique assets, you may purchase additional coverage. The standard rule of thumb, though, is to buy coverage equal to at least 100 percent of reconstruction costs. This total should exclude the value of your land. Anything below 100 percent is considered being underinsured. Depending on how often you renovate your home, these rates and costs can change. We recommend you sit with your agent to work with them on a rough replacement cost evaluation to submit to your insurance carrier for review.


Unsure about whether you’re under or over-insured? Call your agent and have them go through your policy.


Call your local Avery Hall experts to learn more about personal insurance policies that are available and beneficial to you. 

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