DAVE RAMSEY

Dave Ramsey says: Review insurance coverage once a year

Jun 7, 2022, 12:15 PM

(Pexels Photo)...

(Pexels Photo)

(Pexels Photo)

Dear Dave,

My wife and I are on Baby Step 3, and we were talking the other day about how our home, travel trailer and cars have appreciated recently.

Everything is paid for except the home, but we were wondering if we should increase the amount of insurance coverage on these items since they have skyrocketed in value.

– Dale

Dear Dale,

Yes! And you should make it a habit to review all your insurance coverage once a year.

With most homeowners insurance policies you have a stated amount of coverage. Some policies have a “cheat” that allows you an extra 5% or 10%, maybe even 20% in some cases.

But if you’ve got a $300,000 policy on a house you bought five years ago, and it has appreciated to $450,000 then burns to the ground, you’re screwed.

The only thing dumber than not having enough insurance to replace belongings like that is having no insurance at all.

Lots of times, in the old days, if you bought a car or homeowners policy, it covered your car or home regardless, even if they had gone up in value.

Then, when some insurance companies got absolutely hammered after some events like Hurricane Katrina, they stopped doing that.

They stopped covering actual replacement value, and started covering only the specified amount on the policy.

Today, it can be tough to even find replacement value coverage on houses. And if you do, it’s crazy expensive.

When it comes to your home especially, you need to have a policy equal to the value of the home, and you should revisit your coverage and your home’s value every single year.

You have to be vigilant about things like that, Dale, because your insurance company won’t be!

— Dave

Dave Ramsey

(Pexels Photo)...

Dave Ramsey

Dave Ramsey says: It’s not a joint venture, it’s a marriage

A marriage isn't a business partnership, and it definitely shouldn't feel that way either. Here's how to attack finances together.

3 days ago

(Pexels Photo)...

Dave Ramsey

Dave Ramsey says: When the financial drama queen comes out, relax

Everyone has a financial drama queen living in their head, but the sooner you come to terms with it, the easier dealing with stress will be.

10 days ago

(Pexels Photo)...

Dave Ramsey

Dave Ramsey says: Invest wisely, don’t overpay for your home

Unexpected fees can come along with being a homeowner, but always invest wisely and never overpay for something no one won't want to take off your hands.

17 days ago

(AP Photo/Elise Amendola, File)...

Dave Ramsey

Dave Ramsey says: Stand firm, the dollar isn’t going anywhere

While there may be talk about other countries getting together to develop a single currency, the U.S. dollar isn't going anywhere.

24 days ago

(Pexels Photo)...

Dave Ramsey

Dave Ramsey says: This is why you should work with multiple banks

There are multiple reasons why you should consider working with various banks, and none of them have to do with what happened at Silicon Valley Bank.

26 days ago

(Photo by Jemal Countess/Getty Images for Peter G. Peterson Foundation)...

Dave Ramsey

Dave Ramsey says: Don’t stress about national debt, just focus on personal finances

Though the national debt crisis is daunting, Dave Ramsey says focus on yourself, your family and your life. The rest politicians can solve.

1 month ago

Sponsored Articles

...

OCD & Anxiety Treatment Center

5 mental health myths you didn’t know were made up

Helping individuals understand mental health diagnoses like obsessive compulsive spectrum disorder or generalized anxiety disorder isn’t always an easy undertaking. After all, our society tends to spread misconceptions about mental health like wildfire. This is why being mindful about how we talk about mental health is so important. We can either perpetuate misinformation about already […]

...

Desert Institute for Spine Care

Spinal fusion surgery has come a long way, despite misconceptions

As Dr. Justin Field of the Desert Institute for Spine Care explained, “we've come a long way over the last couple of decades.”

(Photo: OCD & Anxiety Treatment Center)...

OCD & Anxiety Treatment Center

Here’s what you need to know about OCD and where to find help

It's fair to say that most people know what obsessive-compulsive spectrum disorders generally are, but there's a lot more information than meets the eye about a mental health diagnosis that affects about one in every 100 adults in the United States.

Dave Ramsey says: Review insurance coverage once a year