We all know that obtaining insurance is a must. Without the proper insurance in place we run the risk of losing everything from material possessions to our entire home or business, and when shopping for insurance we all want the lowest possible rate we can get. But, more often than not, when a consumer is shopping for insurance coverage they become fixated primarily on the yearly or monthly premium amount… what am I going to have to pay now? How much later? This is a question that should be at the forefront of your mind, as we all have budgetary constraints, however, every policy comes with a specific charge for each line of coverage, and for any specific coverage extensions that might be needed. With careful evaluation of each quotation, you can often reduce coverage in one area you may not need and boost coverage in another area of high exposure.
It is important to discuss with your insurance agent about the differences between the policies being offered. Often times there is very little premium difference between two policies, but a great deal of differences in the value each policy is offering in terms of overall protection. I’ll illustrate this with an example.
Take your homeowners insurance for example. The value an insurance company places on your home is often much greater than what you purchased your home for. The reason for this is that an insurance company takes 
into account and predicts the future cost of building materials, labor costs, and other factors. In most cases you can purchase a policy with “extended dwelling coverage”. The levels of extended dwelling coverage that can be purchased are anywhere between 10% and 200% of the dwelling coverage limit.
Given a catastrophic event, such as a hurricane or tornado that does significant damage in a particular area, the demand for building materials in that area will increase and so will the cost of those materials. This is when your extended dwelling coverage kicks in, and it will raise the amount of your dwelling coverage (coverage “A” on your policy declarations page) by the chosen percentage of your extended dwelling coverage. Perhaps you chose to purchase a policy with 10% extended dwelling coverage when you could have purchased a policy with 25% extended dwelling coverage for nearly the same premium amount… this could mean the difference of you having to pay for expensive repairs out of pocket, or your insurance covering the claim completely.
Finding out a claim is not covered because of a gap in your coverage is bad enough… and then finding out that your claim would have been covered had you purchased another policy for a nominal difference in premium will only make matters worse. If you have questions about these coverage extensions or anything else, please feel free to contact me.
Author: Chris Whitmire
