Homeowners insurance is there to protect your home, the contents in it, and, indirectly, other assets you own in the event of theft, accidents, fires and other disasters. However, when it comes time to shop for a home insurance policy, there’s no one-size-fits-all approach. The amount you want to spend on homeowners insurance depends on the property you own and how much coverage you’re looking for.
Types of Homeowner’s Insurance Coverage
There are typically six main types of coverage your home insurance premium will buy. These include:
- Dwelling: Covers your home and any structures attached, your garage when there’s damage
- Detached Structures: Covers a freestanding garage, fence and other structures that aren’t attached to your home but are on your property
- Personal Belongings: Covers your stolen or lost possessions, even if they’re not in your home
- Medical Payments: Covers the medical bills of an injury of another person on your property
- Personal Liability: Covers you if you’re held responsible and sued for damage or injuries of another person
- Loss of Use: Covers some of your living expenses should home become uninhabitable and in repair
These are the basic types of coverage that most people get. To decide on how much coverage to get, you’ll want to:
Calculate the Rebuilding Cost of Your Home
The insurance amount you get should be enough to cover the expenses of rebuilding your home at present-day construction costs. Don’t base the rebuilding expenses on how much you paid for your home and don’t include land costs. The rebuilding cost may be more or less than what you paid for your home or could sell it for currently.
Take Inventory of all Your Possessions
Most homeowner’s insurance plans cover the possessions in your home like appliances, furniture, electronics, and more. But, your belongings may vary in terms of replacement cost and value. Therefore, to calculate how much coverage you’ll need, you’ll need to take a home inventory. In the event a fire hits your home or a burglary, you’ll want enough protection to replace all your possessions.
Keep in mind, you don’t want to use your homeowner’s insurance to cover every thinkable expense; only the big expenses. For example, if it will cost you a couple hundred dollars to put up some loose siding on your house, pay it; don’t file a claim for it. Insurance companies frown on homeowners who make too many claims and may even increase how much you pay monthly. If they consider you a big risk, they may even cancel your policy. You should use your insurance for things like a tree falling on your home or replacing the roof.
So, if you’re still asking yourself, “how much homeowners insurance do I need”, that’s up to you and your independent insurance agent to decide together. Just remember to buy enough so you’re fully protected.
To compare homeowners insurance rates and get the lowest rates, complete our handy online insurance quote comparison form today.