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homeowners insurance

Homeowners Insurance Coverage Amount

How much should I insure my home for? Experts recommend to have enough insurancecoverage to cover the structure cost of the home, any personal items, liability protection and cost to pay for any temporary housing.

House Structure
The policy needs to be enough insurance to pay for the cost of rebuilding the home at the current construction cost. A lot of longtime homeowners have not updated their homeowner's insurance policy to reflect the current cost of rebuilding their home. A lot of times, the original insured amount does not come close to covering construction cost since inflation has caused the cost to rebuild a home to increase.

Most mortgage companies will require that you have enough insurance to cover the mortgage amount. Keep in mind, even if mortgage is paid off, don't get rid of your homeowners insurance policy.

Standard homeowners insurance will not cover floods, earthquakes or any damage that occurs because you have not been taking care of your home.

Personal Items
Most homeowners insurance policies will cover personal belongings for up to 50% to 75% of the amount your home is insured. Make sure you do read the fine print to be aware of the limitations that come with a standard homeowners insurance. Insurance experts recommend homeowners to take yearly inventory of their personal items that they want to be insured for. Use a video camera to help prove certain items that you list on the inventory. Contact your insurance agent about more expensive items.

For personal belongings, there are two methods to insure yoru items: actual cash value or replacement cost up to the limit of your policy. For example, if a unexpected fire destorys a 12 year old television set, having replacement cost policy means you would receive a TV to replace the old one. If you had actual cash value policy, the policy would only cover a small percentage of the TV. This is because the TV had been used for a number of years and the actual value has decreased since it was first purchased. Homeowners insurance companies will vary in policies in regards to insuring expensive items such as jewelry or old items of worth.

Cost of Potential Living Expenses If Home is Damaged
This coverage would cover any living expense you incur if you are forced to temporarily live somewhere other than your insured home due to some insured disaster. Again, homeowners insurance companies all have different limits and policies in how much living expenses get covered.
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