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How Much Home Insurance Do You Need to Buy?

Written by  //  2014/10/29  //  Home Insurance  //  No comments

You’ve found the perfect house, in the perfect location. Now you have to determine how much homeowner’s insurance you need, which is not an easy task. That perfect home is probably the largest purchase you will make in your lifetime. To protect your family and your belongings, make sure to do a little homework before choosing which homeowner’s policy you need.

Take a Home Inventory

The first step in this process is to determine what it would cost to rebuild that perfect home and the possessions in your home. The easiest way to determine what it would cost to rebuild is to take the square footage of your home and multiply it by the local cost of building materials. The cost of building materials can be found by contacting the local builders association or a real estate agent.

You may be surprised to find that your cost to rebuild is considerably higher than what you paid for your home. Insure for the rebuilding cost; replacement coverage is usually more expensive than cash value, but is well worth it. Remember to include the cost of replacing garages or sheds on your property.

Personal Belongings

It is easy to underestimate the replacement cost of our belongings. Your insurance agent can help you determine the coverage needed to replace the contents of the home. If you have antiques, special family belongings, or expensive jewelry, increase the amount of the policy.

Protecting Your Family from Accidents

Your homeowner’s insurance covers accidents on the property, such as falls, dog bites, or falling tree limbs. Be sure you have adequate liability coverage against the huge lawsuits that can result from such accidents.  

Mortgage Coverage

Many financial institutions will require you to carry adequate homeowner’s insurance to cover your mortgage. In case of fire, damage or disaster, be sure you also have enough coverage to rebuild your home.

Special Considerations

If you have an upgraded home, consider a homeowner’s policy that covers 120% above the replacement cost to cover the extras. Replacing an older home may also be costly, according to a specialist from Thomson Schindle Green Insurance & Financial Services Ltd, because updated building codes may add to the replacement cost.

For peace of mind, be sure your homeowner’s insurance policy covers replacement cost of your home, liability against accidents, the complete contents of your home, and any special antiques or family pieces. Also add coverage for temporary living situations for your family if your home is damaged. Homeowner’s insurance is a necessary cost, but the peace of mind it brings is priceless.

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