WATCH VIDEO BELOW! RED ALERT! Globalist Deep State Prepping US for MASSIVE False Flag Attacks as Pretext for Martial Law, Permanent One-party Dictatorship
CLICK HERE TO WATCH THE CENSORED VIDEO
Many factors influence how much home insurance you should buy, including the value of your home and possessions
Your home is likely the single biggest (and in some ways, most important) asset you own. It shelters and protects your family, so it’s important to protect that asset from damage, loss, and destruction as best you can. This typically involves buying a homeowners insurance policy.
Homeowners insurance protects your asset in case of unexpected damages and helps shield you from certain liability for mishaps that may occur in or on your property. But buying the right policy means determining just how much coverage you actually need. Here’s how to estimate how much home insurance you need.
You should comparison shop for any financial product you’re considering, including homeowners insurance. You can compare homeowners insurance quotes from multiple providers using Young Alfred, a home insurance broker Credible is partnered with.
- What homeowners insurance covers
- Estimating rebuilding costs
- Estimating replacement value for personal property
- How much liability coverage do I need?
- Additional coverages to consider
- Home insurance FAQs
What homeowners insurance covers
Homeowners insurance policies aim to protect you, the homeowner, from financial impact if your home is damaged or destroyed. This single policy actually offers a variety of different coverages, depending on the type of loss or damage your home experiences.
- Dwelling — This category covers the actual structure of your home, as well as anything attached to it (such as a garage or permanent fixtures). Dwelling coverage typically includes the exterior, roof, interior, and foundation of your house. If your home is damaged in a storm, fire, or other covered perils, for instance, your dwelling coverage could kick in to cover repairs or a rebuild.
- Personal property — This category covers the personal items within your home, such as furniture, clothing, decor, and other possessions. The personal property coverage portion of your homeowners insurance could pay to replace these items if they’re damaged, lost, or even stolen in a covered event. This coverage typically involves both an overall coverage limit as well as a per-item value limit.
- Other structures — This coverage can protect structures that aren’t part of — or permanently attached to — your primary home. These could include a detached garage, shed, barn, guest house, fence, swimming pool, and gazebo/covered patio.
- Loss of use — If your home is damaged or destroyed by a covered peril, and it’s not safe for you or your family to remain in the home, loss of use coverage can help put an alternate roof over your heads while a rebuild or repairs are being conducted. This coverage, also known as Coverage D, may be limited by dollar amount, or only kick in for costs that are above and beyond your typical monthly housing expenses.
- Liability — If someone is injured while on your property — or if someone in your home causes an injury or damages elsewhere, such as causing a car accident — this personal liability coverage can kick in to cover expenses. This is particularly valuable if you get sued (especially for an amount beyond any existing liability insurance limits you may have), or to cover expenses related to any litigation or deemed liability.
- Medical payments — If a guest or neighbor is injured while on your property — or in some cases, by a pet that lives in your home, even if the incident occurs elsewhere — your homeowners policy’s medical payments coverage can pay their medical bills without getting the courts involved. This medical coverage is not intended for you or other residents in the home, however.
Estimating rebuilding costs
Now that you know what types of losses your homeowners insurance covers, it’s time to consider what dollar value you need from each of those coverage types.
The primary categories to consider are the ones that protect your home itself: dwelling and other structures coverage. It’s important that these two categories include high enough limits to cover the actual cost of rebuilding your home, not just repairing it. While a complete loss is unlikely, it’s still possible. The last thing you want is for a fire or tornado to destroy your home, but your insurance not pay enough for you to rebuild it.
Many different factors affect rebuilding costs. These include your home’s:
- Size, in square footage
- Building style (ranch-style, cottage, or craftsman, for example)
- Exterior (brick, siding, stone, etc.)
- Layout (including the number of bedrooms and bathrooms)
- Roof (size, pitch, and materials used)
- Improvements (A standard homeowners insurance policy will typically cover appliances that are damaged in a covered event, so a new kitchen renovation could bump your limits.)
- Customization (Was it a standard-builder floor plan or a custom home?)
- Unique features
Local construction costs should also factor into the expense of a potential rebuild. A 2,000-square-foot house in central California, for example, would likely cost more to rebuild than the same house in rural Oklahoma.
Also keep in mind that inflation and other market shifts could result in more expensive building costs over time. For this reason, some homeowners choose to include a small buffer in their coverage limits.
Calculating your policy’s dwelling and other structure coverage limits can be tricky, but it’s important to get it as close to “right” as you can. If you choose too low of a limit, you could be left with expenses beyond your coverage in the event of a catastrophe. Choose too high of a limit, though, and you’ll be paying premiums for coverage you don’t actually need.
When considering how much coverage you need, it’s a good idea to get multiple homeowners insurance quotes.
Estimating replacement value for personal property
When calculating how much property coverage to include in your homeowners insurance policy, it can be helpful to take a home inventory. This allows you to estimate the value of all your personal belongings, from expensive artwork and furnishings to the clothes and shoes in your closets.
While a theft or vandalism could affect just a few high-dollar items, a total loss event — like a catastrophic fire — would mean starting over from scratch.
This is also a good time to decide whether you want cash value or replacement cost coverage. Cash value coverage will take into consideration the item’s age and length of use; older items will be depreciated while newer items may be valued closer to their purchase price.
Replacement cost coverage will consider the actual cost of replacing the item, even if it’s been used for years or has increased in cost since you bought it. Replacement cost coverage generally runs about 10% more than actual cash value coverage, but may be worth it to many homeowners.
Many policies will have limits in place for valuable personal property. For example, your insurance carrier may say that jewelry, electronics, or valuable artwork is covered, but only up to $3,000. If you have things that are valued higher than your insurance company’s limit, you may need to add an endorsement or even consider buying a separate personal property policy for your high-value possessions.
How much liability coverage do I need?
Your policy’s liability coverage is intended to protect you if you’re ever sued, helping to prevent you from losing your home (and other valuable assets) in a lawsuit.
This could come into play if you or one of your family members causes property damage or bodily injury to another. For instance, if you were to cause a multiple-car accident, you may quickly max out your auto insurance coverage. You could also be sued by the injured parties (or their families) for pain and suffering, which could far exceed your auto policy limits.
Your homeowners liability coverage could help protect you and your assets by covering not only legal fees and other litigation expenses, but also any damages awarded to the not-at-fault parties.
The Insurance Information Institute (III) says homeowners should carry $300,000 to $500,000 of liability coverage. Whether you need to increase your policy’s liability limits depends on:
- Any assets you currently own
- How much coverage you have elsewhere (such as the limits of an auto insurance policy)
If you own more in assets than your liability coverage limits would protect, you may want to either increase those limits or look for other coverage options, such as an umbrella policy.
You can start comparing quotes for homeowners insurance in minutes with Credible partner Young Alfred.
Additional coverages to consider
Depending on your unique financial situation, standard homeowners insurance might not cut it. Fortunately, additional types of coverage are available to help ensure that you and your assets are adequately protected.
Excess liability coverage offers limits above and beyond your underlying policy’s coverage. While it doesn’t expand your existing homeowner’s policy limits, per se, it does step in to cover losses that exceed those policies’ limits. Excess liability policies provide coverage when your underlying policy reaches the limit it can pay.
An umbrella policy is similar to excess liability, but with an important key difference. This type of stand-alone coverage financially protects you against litigation and kicks in after any other liability limits have been exhausted. The difference is that umbrella policies also offer coverages for liabilities other policies don’t, such as slander or libel.
Umbrella insurance can be an affordable way to reduce risk across all situations. These policies’ premiums are based on your coverage limits, existing liability limits, and how much risk you pose.
Lastly, you may want to consider just adding riders to your homeowners policy. These riders can increase coverage limits for certain items or areas within your home, or provide coverage for perils not included in a typical policy.
Some common riders to consider include:
- Water backup coverage
- Mold damage
- Scheduled personal property (for valuables like art or jewelry)
- Flood insurance coverage
- Earthquake coverage
Home insurance FAQs
Here are some answers to common questions about homeowners insurance and how it works.
How much does homeowners insurance cost?
The average homeowner’s insurance policy premium was $1,249 in 2018, according to III data. The cost of your homeowners insurance policy will depend on many personal factors, such as the features and value of your home, how many claims you’ve filed in recent years, and your location.
What is a homeowners insurance deductible?
Your deductible is the initial amount you’re expected to cover out of pocket following a covered claim. The higher your deductible, the lower your premiums may be (and vice versa).
The minimum homeowners insurance deductible is typically $500 to $1,000, according to III, though certain types of claims may have higher or lower requirements. Many homeowners may find themselves with a percentage-based deductible, such as 1% or 2% of their home’s total value.
What isn’t covered by homeowners insurance?
Each homeowners insurance policy is a bit different, and some carriers offer coverage that others don’t — especially in specific locations. For example, homeowners in Florida may need to purchase flood damage coverage in case of a hurricane, as this isn’t typically covered in a standard policy.
Homeowners insurance also doesn’t cover things like wear and tear of the home, appliances, or personal belongings.
How do I pay homeowners insurance premiums?
If your home is mortgaged, your lender will likely require you to carry a homeowners policy. You may also be required to pay the first year’s premiums upfront at closing and continue making monthly premium payments into an escrow account that the lender holds.
If your home doesn’t have a mortgage — or your lender doesn’t require escrowed funds — you can pay premiums to your insurance carrier directly on a monthly, quarterly, or annual basis.
A word of caution on homeowners insurance costs: If you feel your homeowners insurance is too expensive, rather than cancel it, look for a new policy that better fits your budget. Not having homeowners insurance can expose you to significant financial losses if an emergency or disaster occurs.
Leave a Reply