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News: 2011 Press Release

For Release: March 2, 2011
Media Calls Only: 916-492-3566
Insurance Commissioner Jones Reminds Consumers To Maintain Adequate Homeowners Coverage
Advises Californians to evaluate their insurance needs based on replacement or rebuilding costs

Insurance Commissioner Dave Jones today reminded all California consumers to consider the costs associated with replacing or rebuilding their homes in the event of major damage or loss when evaluating their insurance coverage.

"Consumers need to know that insurance coverage limits are not based on the market value of the home," Commissioner Jones said. "While market value may decrease, the cost to replace/rebuild the structure may not decrease." 

Although the housing market has been declining over the past several years, the costs related to replacement or rebuilding have not necessarily dropped in the same fashion. It is understandable that in a tough economy consumers are looking for ways to save money and to make their dollars go farther. Sometimes, consumers consider reducing their insurance coverage as a way to save those dollars. However, some industry experts have pointed out that consumers can choose to increase their minimum deductibles as opposed to reducing coverage on their home. 

"Consumers are well aware that their home is, most often, the largest investment they make, it is important to adequately insure it at the proper level of coverage," said Commissioner Jones.

Commissioner Jones offers homeowners the following tips:

· Replacement Values. Check the type of replacement value provided in the policy. Actual cash value (ACV) is the amount it would take to repair damage to a home or to replace its contents after allowing for depreciation. Replacement cost is the amount it would take to rebuild or replace a home and its contents with similar quality materials or goods, without deducting for depreciation.

· Save money on homeowners insurance. Deductibles and discounts are generally the easiest places to save money on this type of policy. Most companies offer discounts for people who have more than one type of insurance policy with them, and for people who have had few claims or are long-term customers. When it comes to the deductible - which is the amount you have to pay if there is a loss - usually the higher it is, the lower the premium. It's normal to consider raising a deductible to save on premium, but remember, the bill will be that much more following a claim. 

Consumers are encouraged to contact the California Department of Insurance at 800-927-HELP (4357) if they have questions or for more information.

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The California Department of Insurance, established in 1868, is the largest consumer protection agency in California, regulating the $123 billion insurance marketplace. In 2012 the California Department of Insurance received more than 160,000 calls from consumers and helped recover over $64 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP. Out-of-state callers, please dial 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

If you are a member of the public wishing information, please visit our Consumer Services.

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