How Much Home Insurance Do I Need?

In the event of a disaster, homeowners must be sure they have enough coverage to repair or replace their home and their belongings. However, their insurance needs do not stop there. They must also protect themselves from a lawsuit in the event someone was injured on their property. The most important question a homeowner can ask themselves is, “How much home insurance do I need?“

What Does Your Home Insurance Cover?

The first thing you need to understand is basic homeowner’s insurance is not going to enough. In fact, it is only going to cover damage or the loss of your home and belongings in very specific circumstances, such as a fire, theft, or lightning. There are many other situations in which it would not provide coverage, such as frozen pipes. The best thing you can do is to choose a specialized policy that covers specific incidences, unless otherwise noted in the policy. What you will find excluded is usually damage caused by flooding, earthquakes, or war.

How Much Coverage Does It Offer?

Another aspect of the common question, “How much home insurance do I need?“ is on the percentage of the costs it will cover. Many people tend to rely on 80% coverage. If the home is damaged or completely destroyed, you would be responsible for the other 20% of the cost to repair or replace it. Truthfully, most people believe the chances of their home being completely destroyed are minimal and often settle for the 80% coverage to get the lower premiums. Instead, they should consider what would happen if it was completely destroyed and opt for the 100% coverage.

How Much Home Insurance Do I Need For Personal Possessions?

The last thing anyone wants to do is a complete inventory of their personal possessions, but it is the only way that you are going to figure out how much coverage you will need. Once you detail the items you have, you will need to estimate their value at the current cost. You will then need to check with your current policy to see if it is over the allowed amounts. If so, you may need to get a rider. However, you will also want to be sure that your policy actually covers the cost to replace them and not depreciating their value. Should you own a lot of possessions, this could very easily leave you without enough to replace your belongings.

How Much Home Insurance Do I Need For Valuables?

In your inventory of personal possessions, if you find you have a lot of valuable possessions, such as jewelry, antiques, or art, you will need to get extra coverage on these items. These items will need to be appraised by a professional so that you can know exactly how much of a financial loss it would be.

How Much Liability Coverage Do I Need?

Liability coverage is often the most confusing for a homeowner and they often take the standard amount offered by the insurance company. Generally, the amount of coverage runs between $100,000 and $300,000. However, depending on the circumstances, this amount may not be enough. The best way to determine how much home insurance you need in liability, you will need to determine your net worth. You can do this by adding your assets and income together and subtracting your debts. If the amount exceeds the current amount you are insured for, you will want to increase the amount with your insurance company. This will protect you and your family should you be involved in a lawsuit.

“How much home insurance do I need?” is a question on the minds of many homeowners. Unfortunately, many of them do not take the time to get the answers they need and, quite often, they do not think of it again until they have a claim. The best thing you can do is to sit down and talk to your agent to find out the details about your policy and how it would benefit you to make the necessary changes. The last thing you want to do is find out you don’t have it after you need it.