For just about everyone, finding ways to save money is one of their top concerns. With so many bills to pay and expenses that come up, one of the first areas that many people try to cut back on is their insurance premiums. The rationale is that an event where insurance becomes necessary is often highly unlikely, and it can feel like throwing money away every month for nothing. But before completely slashing that premium in half, make sure you are aware of exactly what to expect with cheap house insurance, because you may be dissatisfied otherwise.
High Deductibles
As is to be expected with insurance of any form, lower premiums are always a trade off with higher deductibles. Basically you risk a more manageable monthly bill for more out of pocket expense if your insurance actually becomes necessary. At first glance many people are willing to take this risk, assuming nothing will happen. However, this mentality can cause much more financial strife if disaster does strike and your deductible is so high that you cannot afford to pay it. If this happens you really have been throwing money away each month on a premium. It is always wiser to make sure to balance the cost of your premium, which of course must be affordable, with a deductible that is low enough to potentially afford if you absolutely need to.
The Value of Your Possessions
Any home insurance policy will have it written in to cover a certain percentage, usually about forty percent, of the value of your possessions if they are lost, damaged, or stolen as part of a claim. However, cheaper policies will often calculate this value based on the actual amount of cash each item is worth, minus depreciation. So if an item is lost or stolen, your insurance will cover only what you would expect to pay nowadays for that exact item. This is often much less than if your policy was based on replacement cost, found only in more expensive policies. Replacement cost means that the insurance company would cover not the exact cost of the missing item but the cost to replace it with a brand new item as similar to the original as possible.
Market Value Insurance
In order to cut premiums down, many insurance policies only insure a home up to its market value, or how much it would be expected to sell for if put up for sale currently. Often this is much less than what it would actually cost to replace or reconstruct the house if something were to happen. In fact, depending on the current market this market value amount may even be less than you initially paid for the home. Cheap insurance policies will very rarely insure a house for more than this though. A more expensive policy will often insure a home for the estimated replacement cost, which is much better in the event of an actual disaster.
These are just a few things to think about as far as what to expect with cheap house insurance. Naturally, there are those that will still feel that a less expensive premium is worth the risks and lower coverage, but make sure you know exactly what you are buying before tossing money at a lower insurance premium every month.
Not entirely sure what to expect with cheap house insurance cover? We’ve got the low down in our complete house insurance quote overview.
Tags: cheap home insurance, cheap house insurance, home insurance, house insurance