[et_pb_section fb_built="1" _builder_version="4.0.9"][et_pb_row _builder_version="4.0.9"][et_pb_column type="4_4" _builder_version="4.0.9"][et_pb_text _builder_version="4.0.9"]<h1 id="article-heading_2-0" class="comp article-heading mntl-block" style="text-align: center;"><strong><span id="article-heading__highlight_2-0" class="comp article-heading__highlight mntl-text-block">How to Negotiate a Change in Your Home Insurance Value</span></strong></h1>[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row _builder_version="4.0.9"][et_pb_column type="4_4" _builder_version="4.0.9"][et_pb_text _builder_version="4.0.9" hover_enabled="0"]<div align="center" style="text-align: left;">
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<p><span style="color: #000000;"><img src="https://www.thebalance.com/thmb/LEyK4WQc6VuD7fvEMMwyJ1CO15U=/2123x1412/filters:fill(auto,1)/when-you-disagree-with-the-insurance-dwelling-value-of-your-home-57eb19053df78c690f204dcc.jpg" width="800" height="532" style="display: block; margin-left: auto; margin-right: auto;" /></span></p>
<p><span style="color: #000000;">If you're looking at your homeowner's insurance policy and the ever-increasing premium, you may be wondering why your home's insured value seems high. You would not be the first homeowner to do so. There are several things you can do if you disagree with the listed dwelling's value or the estimated reconstruction cost of your home—whether it be too low or too high. You want to make sure that the insurance value—and the associated</span><span> </span><a href="https://www.thebalance.com/understanding-what-is-an-insurance-premium-4155239" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">premium</a><span style="color: #000000;">—is accurate and that you are not over- or under-insuring your property.</span></p>
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<h2 id="mntl-sc-block_1-0-2" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Adjusting the Home Value of Your Policy</span></h2>
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<p><span style="color: #000000;">That undervalued coverage may be the case, but the only way to know is to review the values listed on your insurance policy every year and make sure that you have the right amount of insurance. When people think the insured values of their home and possessions are a little low, they can easily get their policy adjusted or</span><span> </span><a href="https://www.thebalance.com/insurance-endorsement-or-rider-2645729" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">add coverages by endorsement</a><span style="color: #000000;">.</span></p>
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<p><span style="color: #000000;">On the other side of this dilemma, however, are the owners who feel they are overinsured. The problem arises when you look at your insurance policy and feel like your dwelling's value has increased too much over the years, and it now looks like you have more insurance coverage than you need. If you are on this side of the equation, you should know that two out of three homes in America are underinsured, yet people still think their insurance is too high.</span></p>
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<h2 id="mntl-sc-block_1-0-7" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Making Sure Your Insurance Is on Target</span></h2>
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<p><span style="color: #000000;">When it comes to a</span><span> </span><a href="https://www.thebalance.com/home-insurance-claims-and-rebuilding-4042916" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">major home insurance claim</a><span style="color: #000000;">, most people who run into problems during the claims process are the ones who have underinsured their home. Despite this, many policyholders look at the cost of insurance and seek places to cut costs.</span></p>
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<p><span style="color: #000000;">New homeowners are often surprised to see what their insurance is costing them. Also, people who have had coverage for a long time get frustrated when they see their homeowner's premium increase while the resale value of their home may not be as high.</span></p>
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<p><span style="color: #000000;">Many factors—besides the market value of the structure—go into determining your annual premium. These factors include:</span></p>
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<li><span style="color: #000000;">Costs to repair or replace the building</span></li>
<li><span style="color: #000000;">The age of the home</span></li>
<li><span style="color: #000000;">Its location</span></li>
<li><span style="color: #000000;">The number of residents</span></li>
<li><span style="color: #000000;">The size of the home</span></li>
<li><span style="color: #000000;">Your past claims history</span></li>
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<p><span style="color: #000000;">Insurance providers keep the exact calculation for the setting of premiums private. However, most will use these and other factors.</span></p>
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<p><span style="color: #000000;">Before you try to adjust the value of your home down, you need to consider discounts or other ways to reduce the cost of insurance.</span></p>
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<h2 id="mntl-sc-block_1-0-20" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Three Ways Your Dwelling Value Increases </span></h2>
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<h2 class="comp mntl-sc-block mntl-sc-block-heading"><span style="color: #000000; font-size: 14px;">Before we get into what you can do about a dwelling value that you find too high, it's important to understand the two main reasons your dwelling value may be at that amount. Your value on your home insurance policy can increase due to one of three factors, inflation, insurance inspection, and the cost of reconstruction.</span></h2>
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<h3 id="mntl-sc-block_1-0-23" class="comp mntl-sc-block mntl-sc-block-subheading"><span class="mntl-sc-block-subheading__text" style="color: #000000;">Inflation</span></h3>
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<p><span style="color: #000000;">Your home insurance has a clause to protect you from the costs of</span><span> </span><a href="https://www.thebalance.com/what-is-inflation-357610" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">inflation</a><span style="color: #000000;"> and increases the dwelling insured value every year accordingly by a small percentage. Over five to 10 years, this inflation increase may become significant, and it might be time for you to review if your dwelling value is still accurate to be sure it is not overinflated.</span></p>
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<h3 id="mntl-sc-block_1-0-26" class="comp mntl-sc-block mntl-sc-block-subheading"><span class="mntl-sc-block-subheading__text" style="color: #000000;">Inspection</span></h3>
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<p><span style="color: #000000;">You may have had an evaluator come to your house for an</span><span> </span><a href="https://www.thebalance.com/insurance-home-inspections-and-what-to-expect-4171580" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">insurance home inspection</a><span style="color: #000000;">. The inspector reviewed the condition of the home and calculated the cost of reconstruction and recommended an increase in the dwelling value to your home insurer.</span></p>
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<h3 id="mntl-sc-block_1-0-29" class="comp mntl-sc-block mntl-sc-block-subheading"><span class="mntl-sc-block-subheading__text" style="color: #000000;">Reconstruction</span></h3>
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<p><span style="color: #000000;">Even if you just bought a new home and are insuring it for the first time, the agent or insurance broker did some calculations. They used a standard cost tool and basic information you provided them with to determine the insured dwelling reconstruction cost.</span></p>
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<div id="google_ads_iframe_/479/thebalance/bal_home-insurance/billboard4_0__container__"><span style="font-size: 26px; color: #000000;"><br />Disagreeing With the Insured Value</span></div>
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<p><span style="color: #000000;">People often think that just because an insurance company sends them something, it is written in stone. However, the insurance estimate for the reconstruction of your home can be wrong.</span></p>
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<p><span style="color: #000000;">Your insurance is about protecting your assets, so if you feel something is off, you have every right to call your representative and ask questions or request a review. Very often, if you have a good case to present, your insurance broker or agent will submit your request to the insurance underwriter, and your case can be reviewed.</span></p>
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<h2 id="mntl-sc-block_1-0-37" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Inflation Adjustments</span></h2>
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<p><span style="color: #000000;">Insurance companies put in place inflation adjustment clauses to protect you when you insure your home. The idea is that if you insure your home and then five years later you have a claim, you won't come up short on the amount of money needed to rebuild after a claim because of this inflation adjustment.</span></p>
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<p><span style="color: #000000;">Unfortunately, the accuracy of this method relies on the home having been insured at an appropriate value in the first place. It also assumes that the cost of materials and construction has, in fact, increased due to inflation since you first insured your home. In some cases, these factors may be off.</span></p>
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<p><span style="color: #000000;">In the case of standard inflation increases over a long period, it is always a good idea to re-evaluate your dwelling value using current reconstruction rates. Your insurance representative is in a good position to discuss your dwelling value with you, so it's a good idea to call and ask if you have any questions. You may be able to get an adjustment simply by calling and having a discussion.</span></p>
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<h2 id="mntl-sc-block_1-0-44" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Ways to Negotiate the Insured Value</span></h2>
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<p><span style="color: #000000;">If a discussion about the increase does not yield favorable results and you still disagree with the insurance provider's numbers, then you can try and negotiate them.</span></p>
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<h3 id="mntl-sc-block_1-0-47" class="comp mntl-sc-block mntl-sc-block-subheading"><span class="mntl-sc-block-subheading__text" style="color: #000000;">Double-check calculations</span></h3>
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<p><span style="color: #000000;">Ask your insurance company to double-check their calculations. Verify the square footage they used and compare the cost per square foot they are using with the general standard in your area, according to local builders. You can always try and negotiate with the insurance company on these issues, and sometimes they will offer you a compromise or alternative solution. Remember that your insurance representative is there to help you.</span></p>
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<h3 id="mntl-sc-block_1-0-50" class="comp mntl-sc-block mntl-sc-block-subheading"><span class="mntl-sc-block-subheading__text" style="color: #000000;">Shop around</span></h3>
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<p><span style="color: #000000;">Contact another home insurance company or two and ask them to estimate the reconstruction cost of your dwelling and give you a quote. If there is a difference in the cost, they come up with, ask them about it. If all the information is the same as the information your other insurer had, then the prices should be similar because insurers use similar—if not the same—rating tools to determine reconstruction costs.</span></p>
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<h3 id="mntl-sc-block_1-0-53" class="comp mntl-sc-block mntl-sc-block-subheading"><span class="mntl-sc-block-subheading__text" style="color: #000000;">Independent appraiser</span></h3>
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<p><span style="color: #000000;">Hire an independent appraiser who is accepted by insurance companies for insurance appraisals. Before you do this, make sure your insurance company will accept the report your appraiser will provide. You do not want to waste money on this if your insurance company will not even accept it. The appraiser must be using tools and methods that are insurance company approved.</span></p>
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<p><span style="color: #000000;">You may also want to beware that in most cases, these in-house appraisals will be more accurate and therefore, may result in higher appraisal amounts. In some cases, they do result in lower appraisal amounts, but the differences would rarely be substantially different.</span></p>
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<p><span style="color: #000000;">You may want to tell an appraiser before you hire them of the estimate you already have, as well as the cost per square foot your insurer used. A good local appraiser will be able to tell you off the bat if that's in the normal range and may be able to save you money and time.</span></p>
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<h2 id="mntl-sc-block_1-0-60" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Coverage Requirements and Policy Type</span></h2>
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<p><span style="color: #000000;">Insurance companies often offer several types of insurance coverage for homes. Guaranteed </span><a href="https://www.thebalance.com/replacement-cost-insurance-vs-actual-cash-value-4154015" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">replacement cost</a><span> </span><span style="color: #000000;">will insure you to the stated replacement value—plus a certain percentage over the insured dwelling value. This added percentage is for if the cost of reconstruction ends up being higher than expected in the event of a claim.</span></p>
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<p><span style="color: #000000;">Some companies may cap the guaranteed value at 125% of your insured dwelling value. Others may offer a guaranteed replacement, "no matter what the cost." Ask your insurance representative</span><span> </span><a href="https://www.thebalance.com/understanding-your-home-owners-insurance-policy-2645388" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">what kind of home insurance coverage you have</a><span style="color: #000000;">.</span></p>
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<p><span style="color: #000000;">Guaranteed Replacement coverage usually requires you to insure to 100% of the evaluated reconstruction cost of your dwelling. This coverage is the best kind of coverage because it protects you no matter what, but you also have other less expensive options.</span></p>
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<h2 id="mntl-sc-block_1-0-67" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Understanding Replacement Cost</span></h2>
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<p><span style="color: #000000;">Replacement cost is different than guaranteed replacement cost because it will not pay out in a claim more than the insured value. If you feel your evaluation is too high—and you don't think you need guaranteed replacement cost—you still need to take a pause.</span></p>
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<p><span style="color: #000000;">You must be convinced a lesser amount than the evaluated dwelling value will cover you sufficiently in a case of a claim. If you are comfortable, then you can take your chances and ask your insurance company if there is a possibility to lower your insurance cost by getting replacement cost versus guaranteed replacement cost.</span></p>
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<p><span style="color: #000000;">Usually, the conditions to get replacement costs are that you insure to a certain percentage of the evaluated dwelling value of your home. Different insurers offer different plans. These plans usually range in the requirement to insure 80% or 85% of the reconstruction value.</span></p>
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<p><span style="color: #000000;">Insurance varies by state jurisdiction, so be sure and ask about this from your insurer. This prior knowledge could avoid the entire argument about whether or not the value is correct and allows you to have a safe middle ground if you are comfortable with taking on the risk.</span></p>
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<h2 id="mntl-sc-block_1-0-76" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Changes by Increasing or Reducing Insured Value</span></h2>
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<p><span style="color: #000000;">Many of the coverages on the</span><span> </span><a href="https://www.thebalance.com/best-homeowners-insurance-4158706" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">homeowner insurance policy</a><span> </span><span style="color: #000000;">are allotted as a percentage of the insured dwelling value. For example, your personal belongings and contents may be set at 70% of the building value. Your additional living expenses may be set at 10% or 20% of the total insured value.</span></p>
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<p><span style="color: #000000;">Any time your insured dwelling value changes, make sure you review how it will impact the rest of the coverages on your policy—especially where it is related to contents and your personal belongings. Sometimes the value of the items in your home may be worth much more than the average person. In these cases, you want to be careful when you reduce your dwelling value since it will also reduce the related insurance amounts for:</span></p>
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<li><span style="color: #000000;">Additional living expenses</span></li>
<li><span style="color: #000000;">Personal contents</span></li>
<li><span style="color: #000000;"><a href="https://www.thebalance.com/remove-other-structures-insurance-coverage-2645713" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1" style="color: #000000;">Detached and additional structures</a></span></li>
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<p><span style="color: #000000;">Reducing your home insurance dwelling value does not impact the liability coverage on your home policy, </span><a href="https://www.thebalance.com/adding-to-your-homeowners-insurance-do-you-need-a-rider-2645704" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">riders</a><span> </span><span style="color: #000000;">or special endorsements, or the special limits within the policy.</span></p>
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<h2 id="mntl-sc-block_1-0-85" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Other Options to Save on Insurance Costs</span></h2>
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<p><span style="color: #000000;">If after evaluating the factors and options for why your dwelling insured value is as high as it is, you still want to find ways to save on insurance.</span></p>
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<li><span style="color: #000000;">Consider increasing the deductible on your policy; this could save you up to 40% on your insurance costs.</span></li>
<li><span style="color: #000000;">Bundle your insurance: You can ask for a quote for your home and </span><a href="https://www.thebalance.com/car-insurance-put-to-the-test-4021625" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">car insurance</a><span> </span><span style="color: #000000;">with the same company and take advantage of the cost savings from bundling your insurance. </span></li>
<li><span style="color: #000000;">Get quotes from other companies. A lot of people worry that if they cancel their policy before the renewal date, they will get hit with a penalty for canceling. What most people don't realize is that if you are </span><a href="https://www.thebalance.com/paying-penalty-for-canceling-insurance-worth-it-2645556" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="2">canceling ​a policy</a><span style="color: #000000;"> mid-term or before your insurance renewal to save money or get more coverages, then it pays to cancel your policy early.</span></li>
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<div align="center" style="text-align: left;"><span><span style="color: #000000;">To read the full article,</span> <a href="https://www.thebalance.com/how-to-negotiate-a-change-in-your-home-insurance-value-4094720">click here</a><span style="color: #000000;">.</span></span></div>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]