As people seek additional ways to cut costs, more homeowners are likely to consider lowering their policy limits.

Travelers is encouraging consumers to think twice about this approach.

“As property values continue to fluctuate, consumers might be tempted to lower their policy limits,” said Elaine Baisden, vice president of national property for Travelers. “But it’s important to remember that the market value of [a] home is not a reliable indicator of the amount of insurance needed.”

While home prices continue to fall, home repair costs across the country are on the rise, and so the cost to rebuild a home is generally not the same as the sales price, or market value, and lowering policy limits could leave homeowners underinsured, according to Travelers.

Home repair costs increased about 4% nationally, despite the recession, the insurer said.

Reconstruction costs are generally more expensive than building new because reconstruction often involves the removal of damaged materials and the need to work around existing landscaping, power lines and other buildings. Reconstruction also factors in the current cost of building materials such as concrete, wood and steel. Some building experts say it costs up to 30% more to rebuild a house than to build it from scratch.

By comparison, market value includes the cost of the land, which will still be there even if a home is destroyed. Market value is also influenced by other factors such as location and quality of schools.

Travelers suggests that consumers explore other money-saving discounts that insurers offer, increase their deductibles, or consider insuring multiple policies with one insurance company.