How Much Home Insurance Coverage Do You Really Need?

Estimating how much coverage you need for the homeowners insurance for your Raleigh home and possessions could be quite difficult. If you overinsure, you’d just be throwing away money each year on unnecessary high premiums. If you underinsure, on the other hand, and then experience a catastrophic loss due to theft, fire or flood, you risk losing everything in your home you’ve worked so hard for. Here are some tips to get you the right coverage.

Understand and Review Your Policy Options

As you probably know by now, not all homeowners policy is created equal, so you have to review your insurance coverage annually to make certain that your coverage is sufficient for your evolving requirements.

Start by researching different types of coverage. For example, actual cash value coverage could recompense you for your home’s value according to its present condition. If you built your house a decade ago, you would only be reimbursed for the 10-year-old appliance, cabinets, windows and others’ depreciated value.

Majority of insurance providers advise that the most comprehensive replacement coverage you could afford so you could be recompensed for how much it would cost to have your house rebuilt with the same quality and type of materials. To get the most out of your replacement coverage, you have to buy sufficient coverage for covering the total cost for rebuilding your house, but not including your land’s value.

Note That Construction Costs Play a Significant Role

Construction worker

Check out average construction costs in your area. If you have refinanced or bought a newly built house within the last year, you’re already aware of the cost. You’re most likely spent money on an appraisal that probably included three valuations such as actual cash value, market value and replacement cost.

If you need to figure out replacement cost lacking the three valuations above, consult a couple of local contractors to determine the average construction cost per square foot in your locality. For instance, if the average cost is $170 and you have a 1,800 square foot home, you need to buy $306,000 in coverage.

Don’t Forget About Liability and Your Possessions

Make certain that you’re sufficiently covered for the possessions in your home and personal liability. Majority of insurance plans give only the actual cash value on a home’s contents. If you want replacement coverage, you also have to buy an endorsement, and if you have possessions that your policy doesn’t cover, such as jewelry, artwork and silverware, buy endorsements for those as well.

More importantly, really consider buying proper coverage for your personal liability. Think about this, if you throw a party and one of your guests slipped on your floors, got injured and decided to file a claim against you, you wouldn’t want to be underinsured would you?

Put simply, you need to consider many different things when figuring out how much coverage you really need. The amount and specific types you need would also depend on various factors, including the size, location and amenities in your home. Consult your insurance provider to help you decide how much coverage is just perfect for you.

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