How Home Insurance is Like Toilet Paper

Have you ever skimped out and bought really cheap toilet paper? While you may have initially saved a few dollars at the register- you most certainly paid for it in the long run. Why?  The cheap stuff is cheap for a reason- it’s about half as thick and it takes about twice as much of the cheap stuff to equal the good stuff. Unfortunately, toilet paper is just one of those things that isn’t worth penny pinching on- because you’ll end up paying more in the long run.

Same goes for home insurance.

With the current state of the economy, many homeowners are trying to pare down their insurance coverage in order to decrease their monthly premiums.  Unfortunately, as they decrease their coverage they are exposing themselves to  greater financial risks in the event of a loss.  If you have a mortgage on your home, you are most likely required to carry homeowners insurance.  If you don’t have a mortgage you may not be required to carry it- but that doesn’t mean you shouldn’t have it.

Doing an annual review of your coverage is extremely important.  As you update your home the replacment cost goes up and your home insurance coverage should reflect that increase.

Just last week a local family in our community lost their home in a fire.  Imagine their distress when they realized that they hadn’t updated their dwelling coverage in 10 years despite the renovation and addition they added to the home. Their replacement cost was about $180,000- their dwelling coverage was set at $125,000.

If you ask them now, I’m sure they would say they would have been happy to pay the additional premium every month to have the appropriate coverage. Instead, they are left to figure out how to pay the gap to rebuild their home to its original condition.

If you want to cut costs on home insurance, you should make sure that you are qualifying for every home insurance discount available to you. Security systems, deadbolts and multi-policy discounts can save customers anywhere from 10-50% on their annual premiums.

But when it comes to home insurance coverage, don’t skimp- it could come back to bite you.