Why would someone want to lower the value of their home? It seems backwards, but lowering the value of your home is something that is frequently done when negotiating homeowner’s insurance polices. The main reason why someone would want to do this is to lower the cost of their insurance, saving money over time without sacrificing the quality of the coverage. Let’s look at ways to lower your homeowners insurance costs, and how lowering the value of your home can help.
Why Should I Lower My Home’s Value?
Most times when building your home insurance policy you will choose to be covered for the replacement value of your home. This means that if your house was destroyed in a fire or natural disaster, you would be compensated for the cost that it would take to replace your home, just the way it was before. The replacement cost will be adjusted for the different types of materials used in your home. For example, a home made out of bricks will be valued higher than a home made from vinyl or wood, simply because bricks cost more. Even the flooring materials and electrical fixtures you have can determine the replacement cost of your home.
When you lower the value of your home, you lower the amount that your insurance company has to cover for it. This will reduce your premiums, save you money each month. However, lowering the cost of your home by too much can be risky. In the event that your home becomes destroyed or seriously damaged, you might not have enough coverage to account for all of the costs of rebuilding. If you plan to lower the value of your home to save money, carefully balance the risk with the amount you will be saving.
What Should I Do To Lower My Home’s Value For Insurance
Here are a few ways you can not only lower your house’s value, but also easy ways to reduce insurance costs in general
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Focus on smaller upgrades: While new countertops, skylights, and an outdoor pool all sound like fun, they will only add to your insurance bill. If you want to improve your home, consider smaller projects like a home security system, updated fire alarms, or new locks. Not only are these useful upgrades, but insurance companies can lower your costs because your home is now safer.
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Negotiate replacement costs: Just because your house is made out of expensive bricks, doesn’t mean that it has to be replaced with brick in the aftermath of an emergency. By negotiating how you want your replacement home to be designed, should you need it, you can plan for a similar house that provides all of the necessities as your previous one, without unwanted features that came with it
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Structure your policy: If you want to pay less every month, a common option is to increase your deductible. While you may have to pay a bit more if an accident were to occur, it can save you money over time. Additionally, many insurance companies offer discounts that many people do not consider. You may find discounts for not smoking in your home, not having pets, and even for personal characteristics like your career or marital status.
Things You Should Not Do To Lower Your Home’s Value
If you want to lower the value of your home to make insurance more affordable, then put down the sledgehammer. Causing damage to your home will make its value go down, but it will make your risk as a customer even higher. Not to mention, intentionally causing damage for the purpose of getting cheaper insurance can be considered insurance fraud, which will not only get your insurance cancelled, it is illegal and can bring serious consequences.
Additionally, you never want to falsify information or lie on an insurance application. Even though saying your 3 bedroom home is only a 2 bedroom may seem like just a minor deviance, it is still insurance fraud, and will only increase your trouble.
“There are a lot of bad ways to lower your home’s value that end up only causing more trouble. If you do want to get a lower homeowner’s insurance rate, there definitely is a right way and a wrong way of doing it. But by doing it smartly, you could save a lot of money while also keeping the quality coverage you want.”
Choose Strickler Insurance For Your Insurance Needs
We understand that everyone’s situation is unique, and that is why we offer insurance solutions tailored to your needs. We work with you to determine a cost and coverage that works for you and give you and your family the peace of mind you need. Ready to see what we can do for you? Contact us today to see how we can help you.
