THURSDAY, JUNE 8, 2023
Living in your own home often has a higher cost over the years. You might wonder if your homeowners insurance needs increase as your property value rises. The answer is, sometimes. However, this is not necessarily related to rising property values in the area.
If you see property values increasing in your area, then call one of our agents. We can help you find out if you need to make changes to your homeowners insurance to your benefit. 
Understanding Property Value Increases
Based on your home & property values, your homeowners insurance needs might increase. After all, the more expensive the home, the more coverage you might need. However, the actual price of the insured dwelling is different from property value.
Your property value usually reflects both the value of the land and the structures on it. Your home’s value is the cost of building the house.
Your homeowners insurance includes dwelling coverage to pay for damage to the structure. Its limits will need to focus on the value of the house as opposed to the value of the full property. After all, your dwelling coverage should be able to help you rebuild the house in case of a total loss.
When to Increase Your Homeowners Insurance
Depending on whether it is the property value or the home value that increases, you might need to increase your dwelling coverage limits on your homeowners policy.
Usually, your dwelling coverage will pay you the home’s replacement cost value. This is the cost of materials, labor and other factors that you would have to pay to repair or rebuild your home. Changes in the market value of these services also affect the value of the home. As these values change, you’ll likely need to update your homeowners insurance.
If you make additions or renovations, then your home’s market value might increase. This might mean you have to increase your dwelling coverage limits.
Just because your property’s value might rise, the market value of the home might not. Though you might have bought your home for $150,000 and it is now worth $225,000, the cost of building the home might not have changed. As a result, you likely won’t have to increase your homeowners coverage.
To figure out your home’s market value, consider having the home appraised. If the appraisal shows that the home is worth more than the limits of your current dwelling coverage, then consider calling your agent about increasing your policy.
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