Interest rates have hit an all-time low; resulting in an onslaught of people taking advantage of this time to refinance their current home loans. This is also prime time to revisit your current homeowner’s insurance policy to ensure what you are paying for is aligned with your home’s value. Today, we wanted to demonstrate how things can fall out of alignment over time; leaving you paying too much for your Homeowner’s insurance.
The two most important factors to look at in this scenario are rebuild costs vs. what the home is insured for. In order to accurately compare the two, a complete review of the home needs to be administered. They will examine:
Interior changes: Updates to bathrooms, kitchens, new flooring, room additions and other construction projects that add value to your home.
Exterior changes: Additions like a new deck, a pool/hot tub, or an outbuilding.
All of these things are considered in tallying an updated rebuild cost. With that, it is critical to know that rebuild costs go up 3 to 5% each year to cover things like increases in construction material and labor costs, and inflation rates. This may be the reason you see premium increases from time-to-time.
So, if you haven’t incurred any (or very few) of these changes to your home and/or personal property, there is a good chance that the 3 to 5% annual increases that have accrued each year may have surpassed the accurate rebuild costs of your home.
One more thing to address during your home refi and insurance process requires circling back to endorsements that cover things you may have purchased since the original policy like a boat, utility trailer, or jewelry. Other endorsements that are good to revisit is earthquake and water backup. While it is not the norm for the latter here to change; it’s definitely not unheard of.
If you are thinking about or are in the process of a mortgage refinance, please do not hesitate to give us a call. As insurance brokers who are not tied to one insurance company, we can both examine your policy and shop out your rates. Both initiatives will not require much effort on your behalf and can save you quite a bit of money – and before you roll an inaccurate rate into your next monthly premium! Call us at 317.272.0800 or email firstname.lastname@example.org and get quotes generally in a few hours.