Trying to decide how much homeowners insurance you need can be tricky, but it is important that you get the right amount of coverage while also not paying for more than you need. Your lender will have requirements, but you may need more than they require, or you may have paid off your home in full and need to decide on your own how much homeowners insurance you need.
Areas of Homeowners Insurance Coverage
The major areas of coverage for a homeowners insurance policy is coverage for the dwelling, the contents of the home, other structures on the property (storage shed, fencing) and liability protection. In most cases, your lender will require coverage for each of these portions of your overall coverage. You will need to decide how much coverage you need for each of these areas to develop your total homeowners insurance.
Homeowners Insurance for the Dwelling
When determining the amount of coverage you need for the dwelling several factors are involved. It is not simply a matter of taking the purchase price of your home. The purchase price includes the value of the land and does not take into consideration how much it would cost to rebuild the property. It is possible the cost to rebuild the home would be more than what you spent on the home plus the property. Then again, maybe it wouldn’t or maybe if the home was completely lost you wouldn’t build the same type home. This is all a personal choice and you can use homeowners insurance calculators to help you decide on the appropriate coverage amount.
Homeowners Insurance for In-Home Contents
To get the right amount of homeowners insurance for the contents of your home, you need to perform an in-home inventory. This means cataloging the items in your home and giving them as close to an accurate value as possible. Unless you have items that, on their own, are worth over $1,000, you can usually just list them and then come up with an approximate overall value for all contents to include on your policy. If you have singular items worth over $1,000, you will need to add a scheduled personal property rider to the policy and detail the items and their value.
Liability Homeowners Insurance and Coverage for Other Structures
Liability coverage and the coverage for other structures on your property often go unnoticed when seeking out the right amount of homeowners insurance, though they are both important. Liability can keep you out of a large lawsuit. Property damage or bodily injury happening on your property and resulting from your negligence has the potential to cost your hundreds of thousands of dollars, so cheap liability homeowners insurance can be beneficial. If your property is severely damaged, items such as a storage shed, retaining wall, driveway or unattached garaged may be destroyed and the cost to replace could mean several thousand dollars out of your own pocket if you don’t have the right amount of homeowners insurance in place.
Homeowners Insurance Price Quotes
If you are looking into adding coverage on top of your lender requirements, or do not have a lender, you can use homeowners insurance quotes to help you find out the cost effectiveness of areas and levels of coverage. For instance, if you are not sure if you need a $500 deductible or a $1,000 deductible, get quotes for both to see the cost difference. You can do this for virtually all areas of coverage to find the right homeowners insurance protection and get it for the best price possible.