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Home-value insurance: We’re not convinced it’s a good idea

Home-value insurance: We’re not convinced it’s a good idea

Home-value insurance: We’re not convinced it’s a good idea
News from Washington Post:

Several weeks ago, we were asked whether it made sense to buy insurance on a property’s value that would pay off if the value declined. We suggested that buying property value insurance when property prices are the lowest they have been relative to income in decades wouldn’t be a prudent use of resources.

Steve Ryles, CEO of Home Value Protection Insurance, begged to disagree. In a long e-mail, he wrote that there is a market for homeowners who “cannot risk losing their equity to an uncertain housing market.”

“You rightly point out that the decision to purchase a home often involves many factors, such as the community, the schools and proximity to work and family,” he wrote.

“However, for most people, their home is their single largest investment and often represents all, or nearly all, of their net worth. Thus, loss in home value can have devastating effects on a family’s financial well-being. If it is prudent for investors to hedge their stock and bond investments, is it not equally prudent for homeowners to protect their single largest asset?”

Historically, homeownership has provided the cornerstone of the typical homeowner’s net worth. After living in a home for a considerable period of time, the mortgage is paid down or paid off, and, with any luck, the home has appreciated in value.

At least, this is how it used to w…………… continues on Washington Post

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