| Question:
 I purchased my home and property a few years ago for $100,000. I need to renew my homeowner's insurance policy, but I'm not sure how much coverage I should purchase. I'm thinking about reducing the amount to $84,000. The cost for dwelling coverage was the purchasing price. The cost of rebuilding the house should not be as much as $100,000.
I really need to save money on this insurance. Do you have any suggestions?
Answer:
The amount your home cost is an irrelevant number when it comes to insuring your home.
The main thing to consider is how much it would cost to rebuild your home. Sure…the home
may be worth $84,000 plus the cost of land but if the home was 1500 square feet and cost
$100 per foot to rebuild you would be grossly underinsured if you reduced the coverage to $84,000.
It wouldn’t be a bad idea to call a few local contractors to see what the going rate for cost per foot is in your area.
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