How Much Homeowners Insurance Do I Need?

How Much Homeowners Insurance Do I Need?

How Much Homeowners Insurance Do I Need?

As a general rule, you should have enough homeowners insurance to fix or replace your home and everything in it if it is totally destroyed. The main building, any outbuildings or structures like a garage, pool, or fence, as well as your furniture, clothes, and other belongings, could all need repairs.

Figuring out how much it will cost to replace your home and everything in it is not as hard as it may seem. The Insurance Information Institute or a licensed insurance agent or realtor can help you through the process.

Multiply your home’s square footage by the local building cost per square foot to get a rough idea of how much it would cost to rebuild it. For example, if your home is 2,200 square feet and the average cost to build is $80 per square foot, it would cost about $176,000 to rebuild it. Ask an insurance agent, a real estate agent, or an appraiser about building costs in your area.

The next step in figuring out how much home insurance you need is making a list of everything you own. Keep track of when and where you bought things, especially expensive ones. Take pictures and videos, and if you have receipts, keep them. If you need to file a claim, it will be easier if you have good documentation.

Don’t forget outdoor furniture and equipment, like a barbecue grill, as well as collectibles, musical instruments, hobby and sports equipment, items that are out of sight, like linens and silverware, and things that are in the attic or garage.

Think about how much it would cost to replace each item with a new one of the same kind, not how much you paid for it at first. Replacement costs can change quickly, and even a two-year-old appliance might be much more expensive now than when you bought it.

After you figure out how much it will cost to rebuild your home and make a complete list of your belongings, you’ll have a good idea of how much homeowners insurance you need.

Who shouldn’t get insurance for their home?

If you get a mortgage to pay for your home, your lender will probably make you buy homeowners insurance. The reason for this is that lenders want to be able to get their money back if the loan goes bad. If you buy your home with cash or pay off your mortgage, you might not need homeowners insurance.

But experts say it’s not a good idea to skip homeowners insurance to save a little money, even if you have the option to do so. Hunter says, “It’s clear that there are some people who could pay for, or even easily pay for, to lose their home.” “But a home is most people’s biggest asset, and losing it would be a financial disaster for them.”

What should I look for in a policy for home insurance?

When looking for a homeowners insurance policy, look for one that gives you the coverage you need at a price you can afford. Also, choose one from a reputable company that does business in your area and does well in our ratings. You should also talk to a few insurance agents to figure out which one you want to work with.

Doug Ommen, who is the insurance commissioner for the state of Iowa, says, “Do your research about insurance companies online.” “We always tell people to go to the insurance website for their state. Some states give information about how complaints are being handled.” Also, choose a company with a good rating from AM Best or another rating agency for its financial strength.

Work with your agent to make sure you have enough coverage for anything that goes beyond what a standard homeowners insurance policy covers. Even though most policies cover your home, outbuildings, furniture, appliances, and other belongings, there are limits for different categories and items in most policies.

If the value of your jewelry, artwork, or collectibles is higher than these limits, you may need extra coverage. Janet Ruiz, who is in charge of strategic communications at the Insurance Information Institute, says, “Talk to your insurance agent and think about what you own.” “You may need extra coverage if you have expensive art collections, a very large home, or intricate woodwork, among other things.”

After making an inventory, it’s important to keep it up to date. Every year, you should look over your insurance needs and add any new things. “You might not be able to claim anything new you brought into the house,” Ommen says. “Jewelry or a gift could be too expensive for you. We tend to close ourselves off and get lost.”

You should also check to see if the companies you’re thinking about are in your area. Look at the map here.