Every homeowner needs a good home insurance policy to protect their investment in what is likely the largest purchase they will ever make; however, what many may not be aware of is how to know they have enough home owners insurance.
How Do I Know How Much Coverage I Need?
Naturally, most people do not want to spend more on homeowners insurance than they have to, but underinsuring could create big problems later should they need to make a damage claim.
These thoughts on coverage limits and how to know how much insurance is enough should help.
- Dwelling Coverage - Dwelling coverage or Coverage ! is the main portion of any home insurance policy and covers the cost of either repairing or rebuilding the house in the event of a loss. Premium limitations are based on the appraised value of the home, its size and age, the current cost of building materials and labor, who lives in the home, and many other details. Overall, the policy limits should more than cover the cost of rebuilding after a total loss to ensure enough home owners insurance has been purchased.
- Coverage for Other Structures - Dwelling coverage protects only the house itself and whatever is attached to it, like a connected garage. Other structures like detached garages, sheds, fences, and more are covered under a separate Coverage B and valued usually as 10% of Coverage A to cover the cost of repair or replacement.
- Personal Property Coverage - When there is major damage to the home, that commonly means the loss of much of the personal property inside the home. Estimating the value of personal property is difficult. While most homeowners insurance agencies recommend covering personal property between 50 and 75% of the value of the home, that is not always enough. When there are high-value items, home owners insurance agencies recommend making a detailed inventory of personal property, having expensive items appraised, and basing policy limits on inventory and appraised values.
- Personal Liability - Every home insurance policy will also include personal liability coverage in case someone gets injured on the property. Insurance agencies typically suggest $100,000 as a minimum limit, with umbrella coverage a second option for a greater level of liability protection.
- Medical Expenses - Another coverage included with a homeowners insurance policy is Coverage F or medical payments coverage, no-fault protection for incurred medical bills resulting from smaller injuries that happened in the home. Most policies have a maximum coverage up to $5,000 in this category.
Now You're Ready to Get The Right Amount of Homeowners Insurance!
Though it is impossible to estimate the exact amount of coverage a homeowner needs without speaking to a knowledgeable home owners insurance agent, these guidelines should help them get an idea of the amount of coverage that will provide the best protection for their home.
More information can be gained by calling a local homeowners insurance company!