26 Apr Homeowners Insurance: How Much Coverage Do You Really Need?
There are many unforeseen events that can lead to needing to have your house rebuilt. It could catch fire, burning everything that’s inside. A tornado or hurricane can sweep through the area, turning the house to rubble. Flooding can also cause major damage. The real issue here isn’t how your house gets damaged so much as it is do you have the right amount of insurance to rebuild and cover your losses?
Wondering about the answer to that question? Here’s how you can determine just how much homeowner’s insurance you need.
Consider Market Value
When thinking about market value, it’s important to consider how much your house is worth. Look up some comps (comparisons) in the neighborhood. Are those houses similar to yours as far as square footage and condition are concerned? If so, then you have a general idea of what your house is worth on the open market, and that’s how much insurance coverage you should consider having, at least to start with.
Think About Materials and Equipment
Next, you need to consider what it would take to rebuild or repair your house. Is it filled with antique fixtures and stained-glass windows that would cost a fortune to replace or replicate? Is it a fairly standard “builder basic” home without any fancy upgrades? Either way, you’ll have to come up with everything needed to rebuild the home as it was, which should be factored into your insurance coverage.
In addition to materials, you’ll also need to think about the costs for equipment and person-power. Unless you’re a builder, you’ll have to hire a company to rebuild your home for you. This will add on to the cost of materials, sometimes doubling it. Make sure that your insurance policy factors this in as well.
Don’t Forget About Your Furniture and Other Belongings
On top of what it takes to rebuild your home, you’ll also need to furnish it. All of your couches, chairs, beds, bookcases, tables, and more will need to be replaced. Your appliances will as well, including the stove, refrigerator, washer and dryer, and anything else that you had. When you call in a claim, your insurance company will ask about the furniture, appliances, and other things that you lost (like clothes or bedding) and using their age and condition, they will pro-rate how much they’re worth. You’ll receive this amount to replace them.
How can you ensure that this is accurate? Make a list of everything that you own, going room by room. Spend some time noting what you paid for them and when you bought them. Give a copy of this list to your insurance agent, who can then use this information to make sure that you have enough homeowner’s insurance in place.
Your Mortgage Lender May Play a Factor
Finally, you should check with your mortgage lender regarding their regulations about your homeowner’s insurance. They might require you to have a certain amount of coverage in case your home is a total loss, so that they can recoup their investment.
Want to review your current coverages and update them if needed? Our knowledgeable team at Spivey insurance can help. Contact us today!