With the burst of the real estate bubble the home values have been dropping like a brick and that is no exception in Phoenix. Phoenix has actually been one of the worst hit cities as far dropping real estate prices are concerned. So how does that effect your home insurance Phoenix? One of the few silver linings in the real estate collapse and rough economy is that it should be lowering your home insurance (not a lot but a little bit). Let’s take a quick step back, one of the major components that a homeowner’s insurance policy covers is if they had to replace your home back to its original condition. Let’s use an example, if your house unfortunately burned down and you had to rebuild, your home insurance Phoenix policy would pay for the rebuilding. How do they know how much it would cost to rebuild your house and how much to insure it for? Each insurance company has a calculator more or less that comes up with a dollar amount that it would cost to rebuild your house based off different things like building costs, demographics, size of house, etc.  One important thing to note is that they are concerned on how much it would cost to rebuild the house which is different than what the house is valued at. As we know house valuations tend not to run in line with the cost to rebuild for many reasons. So if the insurance companies are not insuring the value of the home but the cost to rebuild it, how is the dropping home valuations helping me save money on my home insurance Phoenix? With the bursting of the real estate bubble it is dragging the economy thru mud right now and as a result prices have been coming down across the board. The cost of building homes is no exception and has also come down in price which should help you save some money. My suggestion would be to shop around and receive some online Phoenix home insurance quotes and see if you can’t find a better rate with a company that will give a reasonable cost to rebuild your home. Just remember to be reasonable, just because you bought your home for let’s say $100,000 which is well below market value and the cost to rebuild is $150,000 you need to insure it for $150,000.