ICHQ | Site Author
Home insurance can give you peace of mind, knowing that you’ll receive money to make repairs or replacements if disaster strikes. Unfortunately, obtaining those funds is often more complicated than you might think, especially if you don’t have enough coverage.
How much homeowner’s insurance do you particularly need? That answer varies, but you should protect yourself with the right kinds of coverage.
How Much Should You Insure Your Home for?
You must have enough homeowner’s insurance coverage to pay for repairs, replace damaged property, and living expenses if you require temporary living arrangements. You should also protect yourself from financial loss if someone injures themselves on your property.
An uncovered loss can force you to pay for it out of pocket, putting you in a financial bind. It’s important to accurately assess the value of your property to ensure that your homeowner’s insurance coverage limits are appropriate.
If you make upgrades or new purchases, reevaluate your policy limits to be sure they are still sufficient. At the same time, you don’t need to pay for too much insurance or coverage you don’t need.
An insurance agent can help you determine the right amounts, but be cautious: They may encourage you to purchase excessive coverage to increase their commissions. An insurance appraiser can tell you how much it would cost to make repairs to bring your home back to its current condition.
Should You Buy a Cash Value or Replacement Cost Homeowner’s Insurance Policy?
Although replacement cost policies have higher premiums, they are probably the better choice. With these policies, your payout should be enough to repair or replace your losses at current prices.
Factors like inflation, the cost of materials and labor, changes in building codes and housing demand in your area can drive up the amount you would have to pay to repair or replace your home, other structures and belongings. Cash value policies depreciate your property and don’t consider current replacement costs.
What Are the Different Kinds of Homeowner’s Insurance Coverage You Can Get?
To adequately protect yourself, you need to cover these important bases. Each insurance company sets its own terms, so be sure to read your policy documents to understand:
- Covered and uncovered damages
- The types of property covered by each component and any exclusions
- Your deductible
- When you will need to purchase additional coverage for specific items, such as jewelry or artwork
The language used in these documents is often difficult to understand, so ask for clarifications if needed. The answers can help you decide how much home insurance you need.
Dwelling coverage
How much should you insure your home for with dwelling coverage? Your dwelling coverage should reflect the cost of rebuilding rather than your home’s market value. This approach helps you to pinpoint the right amount of coverage.
Dwelling coverage protects your home and attached structures, such as a garage, patio or deck. Some insurers cover in-ground swimming pools as part of your dwelling coverage, while others include them in other structures coverage.
Other structures
Many homeowners have structures on their properties that aren’t attached to their homes, such as storage sheds, fences, playhouses, guest houses, or detached garages. Insurance companies typically allow 10% of your dwelling policy limit for other structures coverage, although that percentage may vary by insurer. Using the 10% rule, you would have $25,000 in other structures coverage if your home’s dwelling coverage limit is $250,000.
If you have several other structures or their replacement value exceeds what your policy allows, you can buy additional coverage. This endorsement or rider amends your policy’s original limit to reflect how much homeowner’s insurance you may need if you experience a loss.
Personal property
Your home’s contents fall under personal property coverage, and the limit is often 50% of your dwelling coverage. To ensure you have enough personal property coverage, create a detailed list or make a video of your belongings. If applicable, you can include items in rented storage units.
Insurance policies often have sub-limits that place a maximum recoverable value on certain types of possessions, like jewelry and other expensive items. You may need to add an insurance rider to get full coverage for these items, and you may need to have them appraised.
Personal liability
If a visitor or guest suffers a significant injury to your property, you may be responsible for paying for their damages. Personal liability coverage pays these damages, so you won’t have to pay them out of pocket.
To determine how much homeowner’s personal liability coverage you need, add up the value of all your assets. Typical limits are $100,000, $300,000 and $500,000. If your assets total over half a million dollars, you may benefit from buying umbrella insurance coverage.
Medical payments
Medical payment coverage helps pay for treating minor injuries that non-residents sustain on your property. These limits are usually $1,000, but yours may be different. If you have liability risks, such as a trampoline or swimming pool, you may want to add additional coverage to your policy’s medical payment limit.
Loss of use
If a covered loss makes it impossible to live in your home while you make repairs, loss of use coverage can help you pay for additional living expenses. This only applies to expenses over what you usually spend for things like living quarters, groceries, and pet boarding.
Many insurers allow 10% to 20% of your dwelling coverage limit for loss of use benefits. This may not be enough to cover all your extra costs.
Does Everyone Need Homeowner’s Insurance Coverage?
Mortgage lenders typically require borrowers to obtain a homeowner’s policy. Although the amount of home insurance coverage you need may change once you pay off your mortgage, these policies continue to help you protect your investment.
What Kinds of Damage Do Homeowner’s Insurance Policies Cover?
Your insurance company should provide you with documents listing the kinds of damages covered. Most policies cover losses caused by:
- Hurricanes and other kinds of severe storms
- Fire and smoke
- Theft
- Vandalism
Carriers sometimes cover other damages, such as leaking roofs, water damage, foundation repairs, tree removal, and dog bites. The reason for these damages often affects whether your insurance company will cover them. If neglect or poor maintenance caused the damage, you may not be able to receive compensation.
Check your policy to be sure if there are any exclusions or separate limits that apply to your property. You may need to purchase endorsements to have as much homeowner’s insurance coverage as you need.
Do Homeowner’s Insurance Companies Pay Claims Fairly?
When you purchase an insurance policy and pay your premiums regularly, your insurance company must legally pay valid claims. Unfortunately, these insurers may not pay fairly. They might:
- Deny valid claims
- Offer intentionally low payout amounts
- Question the existence of your personal property
- Blame the damage on you or an excluded cause
- Penalize you for being underinsured
You don’t have to handle these problems alone. Insurance Claim HQ can help.
Can Insurance Claim HQ Help With Homeowner’s Insurance Coverage?
It is often a good idea to hire a property casualty attorney for the best outcome when you have a homeowner’s insurance claim. Insurance Claim HQ can help you file your claim accurately and on time. We will also fight to obtain the maximum compensation that’s available from your policy. If the insurance company still refuses to be reasonable, we can file a bad faith insurance lawsuit on your behalf.
If you want an opinion on how much homeowner’s insurance you need or need assistance with a claim, contact us using our online form or call 844-964-0778 today.