How Much Homeowners Insurance Do I Need?
Posted on Feb 25, 2020
Homeowners insurance covers more than your home. It also includes things like your personal property and can offer protection for your savings.
The types and amounts of homeowners insurance you need can vary based upon several factors. Keep these considerations in mind when choosing your insurance and determining the amount of homeowners insurance necessary to rebuild or replace your home.
How Old is Your Home?
While many people believe it will be more expensive to rebuild or repair modern homes, that isn’t necessarily the case. Depending on the age of your home and the last time it was “updated”, you might find a whole host of problems affecting the cost of rebuilding.
Some of the problems you may face include:
- New code requirements the home doesn’t meet. An insurance endorsement for Ordinance or Law can help cover the potentially costly cost of getting your home up to code when rebuilding.
- Features that are no longer available. You may have to purchase modified replacement cost coverage to replace these features – or pay out of pocket.
- Costs of modernizing. In addition to the costs of getting your home up to code. You should also consider modernizing systems as you rebuild your home, when possible. This includes updating plumbing, wiring, or replacing roofs. Consider these when determining how much coverage you need. Chances are, there is a policy that can make that happen.
Working with a reputable independent insurance agency, like Otterstedt, can help you assess the current state of your home to determine additional types of coverage you may require.
Other Factors Affecting Rebuilding Costs
Even modern homes have costs associated with rebuilding. While you may not want to upgrade to older home protection now, that doesn’t mean you’re entirely off the hook.
Aside from the building materials in your home, you must also consider the following details that may affect the cost of rebuilding your home:
- Specialized or custom building materials
- House style
- Roof shape and materials
- Square footage of your home
- Number of rooms in the home, especially the number of bathrooms
- Attachments and features of your home
- Location of your home
- Improvements or additions to your home
These things affect the costs and complexities of rebuilding or repairing your home in the aftermath of covered events. Even one of these can swing your coverage needs by tens of thousands of dollars or more. Homeowners should also increase coverage routinely to accommodate the rising costs of building materials and rare materials.
Liability Insurance
Perhaps one of the most important types of insurance for homeowners today, liability insurance helps you cover injuries, repairs, and legal fees if someone, or their property, is damaged or injured by your property or while on your property. Working out the amount for your home, in your neighborhood, etc. can be complicated.
We can help with that.
Other Things Your Insurance Covers
Insurance isn’t only about repairing or replacing the structure of your home. It is also a tool to help you replace your furniture, appliances, clothing, etc. in the event of peril or another covered event. It provides other types of protection for homeowners.
In this instance, you must choose whether you want Actual Cash Value (ACV) coverage or Replacement Value. ACV assigns a cash value to items once depreciation has been removed, the older the item is, the less value it has. Replacement value covers the current costs of actually replacing the items minus your deductible.
You will need to talk to your insurance agent about high-value items you have and what insurance option meets your needs for protecting these items. Also, discuss your options for additional living expenses should the damage to your home be extensive enough to cover other living expenses for you and your family.
How Can Otterstedt Insurance Agency Help?
Getting the right type of homeowners insurance is as crucial as getting the right amount.
