I had occasion today to talk with my insurance company (USAA) regarding the upcoming renewal on my homeowners policy.

My policy I suppose has always had an automatic coverage escalation clause intended to keep the value of insurance current with, over the 30+ years I've had the policy, inflation as regarded the cost to rebuild the house in case of total loss. Most years the amount of insurance I bought on whatever house I lived in went up.

Today, it was by chance in discussing something else about my coverage that the lady at USAA made me aware that the current replacement cost to rebuild my house was $173,000. The recent policy I had received that covered the renewal information showed the Dwelling Protection to be $233,000, which is the level the cost to rebuild had risen to back at this time last year 12/09, and from $213,000 in 12/08.

So the cost of rebuilding my home has deflated from the $233,000 in 2010 to $173,000 for the one year insurance period commencing on 12/2/10. Though the premium for this coming year would have increased by about 10% had I continued to insure the house for $233,000.

The point of this post is to suggest to those who own homes that perhaps the cost of reconstructing them has diminished and thus owners may be paying for more homeowners insurance than is needed. I revised my coverage to $175K, thus reducing my previum for the coming year by $120.