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This is something that can be confusing if your agent doesn't take the time to explain. Dwelling coverage actually has nothing to do with the market value of your home. Dwelling coverage is based upon what it would cost to REBUILD your home. This is usually determined initially by examining the specifics of your home through an evaluation tool provided by a 3rd Party service (such as Marshall Swift).In terms of your Dwelling continuing to go up, most insurance companies have something built into their policies to protect against inevitable inflation. They know that most customers will not review their Home policy every year and they never want the client to be in a situation where 10 years down the road they have a claim and because the Dwelling was not increased, there is not enough coverage to rebuild the home. So it is pretty common for dwelling coverages to increase 3-4% a year to compensate for this.Although rebuild cost has not decreased like Market value, it certainly has not increased by 3-4% every year since the market began declining in 2008. My recommendation would be to call your agent and have them "re-evaluate" your Dwelling coverage to make sure it is not higher than it should be. My guess is that if you've been with the same company for 5+ years, the Dwelling coverage might be higher than if you evaluated it today.Does this make sense? If there is anything else I can do to help, please let me know.
I am an agent in CA, so unfortunately I am not an expert on home insurance in IL. I can tell you however, that your Agent most certinaly should not only review with you how the figure is being reached, but should also be asking you questions to verify the details of your home. Questions confirming things like square footage, the quality of the kitchen and bathrooms, what type of flooring you have, etc.As for the premium it does seem like a large increase over a short period of time. It might be justified, it might be worth it, but it doesn't hurt to be informed and you want to make sure that your agent is providing the value that potentially would justify paying more.
Thank you for your compliment! If you could mark this as "helpful" I would greatly appreciate it.
Can I ask the agent to show how he is calculating dwelling price and the features that he is using to come up with that price?
Hi David,Thanks a lot for explaining this clearly. I now got an idea.We baught a new home in 2009 and our Insurance was $687/year which includes earthquake,personal liability and mine subsidence endorsements.Every year from 2009 the premium is going up by $80-$100/year. This year we got a quote of around $987 and we were claim free til now. I felt that the quoted price is high and am thinking to take quote from a different company.Do you advise to have mine subsidence endorsement for a home located in Fairview Heights, IL area?Your advice will be highly appreciated. Thanks again!!
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