The cost of your homeowner's insurance is not necessarily related to the market value of your house; this is a common misconception amongst insurance consumers. The cost of your insurance, and therefore the amount for which it is insured, is based on how much it would cost to replace your house at current prices. Because the cost of replacement continues to rise, most insurers automatically increase the amount of insurance on your home to keep pace.

Much of the homeowner's insurance sold today is on the basis of guaranteed replacement cost. This means that the insurer will pay whatever it costs to rebuild your house, even if it's more than what the house was insured for. Therefore, you can appreciate that the insurance company wants to keep the insurance on your house as close as possible to the true replacement cost, and you pay the premiums accordingly.

You may think the insurance company is over-insuring your house, and therefore overcharging you, but there are other factors to consider . You may think it would cost less to rebuild your home than the amount for which you are insured, but you must keep in mind that if your house was completely destroyed by fire there would be other costs such as site clean-up and debris removal which the insurance would have to pay for.

Policies vary in the coverages offered. It is a good idea to review your policy with your broker to be sure you are adequately insured.

Contact Mooney Insurance Agency Ltd. if you would like to discuss your homeowner's policy with one of our agents.

For more information, E-mail us at info@mooneyinsurance.com