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How Much Homeowners Insurance Do I Need

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The time to think about whether you have home insurance are not enough when your home burns. Because most mortgage lenders require proof of insurance before closing on your home, you have some chances, But not necessarily the right amount of home insurance. One of the most important factors is the amount of insurance on the structure of your home. A careful examination of basic coverage – and understanding that coverage limits for most other Categories depend on the amount of coverage you choose for your home – can help determine what level of insurance is right for you.

Structure

You need enough home insurance to cover the cost of rebuilding your home at current market prices. At first, check with a local builder or your realtor.

To find the average construction cost per square foot for the area in which you live. Multiply this value by the total area of your home. For example, if an average construction cost is $ 200 per square foot and your home is 1800 sq ft, an approximate estimate of the cost to rebuild your home is $ 360,000. Factors to consider that can increase this amount include quality building materials, customization or home remodeling projects that enhance the value of Your home, as well as additional structures on your property, such as a garage or shelter.
Ownership
Before you can determine the amount of insurance to include for personal possessions, carry out a complete inventory at home. In addition to photos and a detailed list of all valuables in your home, include receipts for purchases Important and valuations for antiques or objects, such as jewelry, art or collectibles whose value may be subject to interpretation. According to the Insurance Information Institute, most policies cover personal possessions to 50 to 70 for For example, if you insure your home for $ 360,000, the insurance for your personal property will be $ 180,000 to $ 252,000. If the value of the insurance you place on the structure of your home. Your personal property exceeds that, consider purchasing an endorsement to cover the additional amount.

Expenses

If the damage to your home is extensive, or if your home insurance company declares a total loss, coverage of living expenses can be a lifebuoy. Most insurance companies cover standard expenses such as As lodging and meals, about 20 percent of the amount of insurance you place on the structure of your home. If you insure your home for $ 360,000, the amount of life insurance charge on your Policy will be about $ 72,000. Because coverage rates vary widely among individual businesses, this is an area that you should investigate thoroughly.

Responsibility

A private policy standard insurance usually includes about $ 100,000 of liability insurance to cover property claims that you, a member of your family or your pet brings to other people. This is a minimal amount Insurance, to better protect your assets, the Insurance Information Institute recommends increasing this level of insurance to between $ 300,000 and $ 500,000.

Considerations

In addition to choosing the right amount of home insurance, it is important to choose the right type. Home insurance types range from HO-1, the most necessary, to a guaranteed replacement, HO-8 policy. Although you should talk to your insurance agent to ensure that your plan meets your needs, from SmartMoney.com recommends no lower than a HO-3 policy, as this type provides protection from all hazards, such as disasters Natural objects, falling objects and related damage from faulty plumbing or electrical work, unless the policy specifically excludes them.

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