One of the FAQs we receive on a regular basis is this: “Why is my house covered for $X when my tax bill says my house is worth $Y? Shouldn’t we change my coverage?” Quite often (but not always,) the tax assessment is less than the homeowners policy coverage, and customers feel that they are insuring their home for too much, and they are wasting money on their premium.
We use calculations to determine the coverage you need, and these are based on the replacement cost of your home, should you have a total loss in a claim, such as a fire. In addition to the cost of rebuilding, it also covers the cost to clean up the damage that is left behind.
Your tax bill is based on the market value of your home, that is, how much you would get if you sell it. It’s also based on other factors like the market value of your neighbors’ homes and businesses in your community, and the operating costs of your town government.
A real estate appraisal for the purposes of selling or refinancing your home may end up a completely different number, because it is based strictly on the sale value of your home, and does not take into consideration the money needed by the municipality to fund services in your community.
Contact us if you have questions about your coverage. If we haven’t reviewed your coverage in a while, now is a good time to do so, especially if you’ve made changes to your home by upgrading or adding on. We can easily calculate your current replacement cost.
Homeowners policies are reasonably priced for the amount of coverage that is available, and often changes in the dollar amount of coverage do not make a significant change in your premium. We would love to talk to you about it!