Do You Have the Right Amount of Homeowner’s Coverage?

Before you begin to determine the right amount of insurance to have on your home, you’ll want to know exactly what a homeowners policy covers.

Common Coverages

Simply put, homeowner policies cover your home and everything in it (including your liability) from outside calamities. Coverages include but are not limited to:

  • The structure
  • Your liability
  • Personal property
  • Optional coverages for several different situations

The Structure

When you’re pondering how much insurance you need to have on your structure, look beyond the resale or market value of your home.

Consider how much it would cost to rebuild your house. This means you’ll want to look at your square footage, type of construction, material costs, additional buildings and any special features you might have.

When you calculate the cost to rebuild your home, it may be more than the market value. So, you may want to consider insuring your house for the replacement cost.

Also, make sure you account for rising market values. You can discuss how to handle that with your agent.

Your Liability

This protects you against lawsuits for bodily injury that you, a family member or your pet causes whether or not your at home.

Standard coverage is usually $100,000 but you may be able to get higher amounts. Check with your agent for more information.

Personal Property

List, take pictures of and/or videotape the possessions you want to insure. Keep the receipts for them. Again, consider insuring for replacement cost instead of actual cash value.

You may want to consider replacement cost rather than actual cash value policies for your personal property. Actual cash value only insures you for what the item is worth at the time of the loss. Replacement cost coverage pays out on your possessions based on the current cost to replace them.

Optional Coverages

You may want to consider taking out a special floater for your valuable jewelry, furs or electronics.

For example, homeowner policies often limit payout on expensive items like furs or jewelry. So, if these items get stolen and they’re not separately accounted for, you may not receive all that they’re worth.

There are several other optional coverages you can purchase. Check with you agent about all of the particulars that best suit your situation.

In the end, it all comes down to peace of mind. What amount of coverage on what might be your most valuable possession, gives you that?

Steve Wyrostek Expert A 20 year plus veteran of the insurance industry, Steve managed departments in the personal and commercial lines areas of major insurers. He’s familiar with how insurance—ranging from boat to workers compensation—works.

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