Saving money is bad…sometimes

You hear it constantly on the radio and T.V. It shows up in your mail on a weekly if not daily basis, heck a banner ad probably popped up before you even got here.  Each insurance company quoting exactly how much money they can save you or how many discounts are available and rarely getting specific on coverage.

Yes, I think saving money can be bad.

If you have not taken the time to review your insurance plans on a regular basis you may actually be saving too much money.  Yes I just said too much money.

Having watched insurance cycles for 8 years it is reasonable to save in the neighborhood of $200-$300 simply by a change in the market.  This, in my opinion, is ok.  If you are saving more than this you may have missed a change in the market.

So, step 1 is establish you and/or your family’s base line of coverage.  Step 2 schedule the time every 12 to 18 months to review your coverage and review your rate to make sure it is still competitive.  Saving a few hundred dollars is good but saving much more than that just means you have not kept up with your regular insurance reviews.

Update 5/13/15

The more things change the more things stay the same.  The industry is getting close to taking advantage of this massive opportunity.   That’s correct, the inherent laziness of humans combined with an old and tired purchasing structure is a massive opportunity.  Good things should be coming soon.  The savings, on the surface, will look smaller.  The reality is your average price over a ten year period will be better.

Are you overinsured?

I am aware of no way to ever say someone has too much insurance, the fact is you just never know.  There is just one circumstance you can say you may be overinsured when it comes to a home.  An insurance company is insuring the cost to rebuild your home.  They are not covering your tax assessment nor are they covering the market value of the home or even what you think your home is worth.

So how do you become overinsured?  Generally, I see this when a policy has not been thoroughly reviewed in a 2-3 year period and the coverage has been allowed to automatically inflate.  The other is when agents simply insure a home based on the previous carrier information and do not actually review the replacement cost of a home.


  1. Figure out the square footage of your home and multiply it by $130  $150(updated 5/12/15) per sqft this will give you a rough idea.
  2. Call your agent and ask for a full review of the dwelling coverage on your home insurance.  Before you do this assemble a pretty thorough description of the details of your home including square footage, types of floors, bedrooms, bathrooms, etc.  They can then input this into whatever evaluation software they are using.
  3. The other thought is if you happen to know a builder, not a handyman, plumber, roofer or another specialist an actual person who has built a home.  Check with them as well.

FURTHER, update 5/12/15

The more things change the more they stay the same.  The challenge may be slightly greater now that the overall “market” for home purchases has leveled a bit.  Think of it this way;

  • You can buy homes all over the U.S. that would cost more to build than buy used
  • Based on insurance company math people are building brand new homes at 50-100% more of what they are worth on the open market
  • With a choice of at least three if not seven different replacement cost calculators, who is right?  I have no idea

Bottom line, a little homework goes a long way.  Do your best.  Don’t settle for less but know that settling on a comfortable figure is the likely outcome.  As always, hope it never matters.


Just some thoughts.