Since real estate values are down, should I lower my homeowner insurance amount?

Q. Since real estate values are down, should I lower my homeowner insurance amount?  Also, What about earthquake insurance?

A. First, let us look at the question about homeowner’s insurance. The amount of insurance that you buy for your home should not be confused with the real estate value of your home. Depending on when you bought your home, median prices have been significantly up and down since 2000, peaking in the year 2006.

Instead of selecting coverage based on the resale value of your house, the right amount of insurance is a limit set that accurately reflects what it would cost to rebuild your home in the event that it is destroyed.

Many homeowners rely on their agent to calculate the replacement cost of their home using a computer program designed for that purpose, but they shouldn’t rely on that estimate alone. Courts have backed up insurance companies in saying that it is the homeowners’ responsibility to make sure the contract they sign has adequate replacement limits. So, look to construction costs in your community for guidance. 

For the entire article….http://www.signonsandiego.com/news/2011/jan/08/intricacies-homeowner-insurance/#

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