“How much home insurance is right for me?”

We get this question quite often.  The answer typically requires answers to some additional questions.

It is important to remember that the cost to rebuild your home is called its “replacement” value.  This can be very different from the estimated market value or even the actual purchase price of the home.  In some cases, it can cost more to rebuild the home you own compared to buying a new one.  Understanding the replacement cost of your home is the first step in determining how much home insurance you may need.  However, your dwelling replacement cost is just part of the answer to the question.   You also need an idea of the replacement cost of your contents and personal belongings.  Your insurance agent is here to help you determine these values.

Besides making sure you have enough protection to cover possible damage to your own home and contents, you also need to evaluate your exposure to liability risks.  These claims typically result from injuries or damages to others while on your property.  In recent years, it’s not uncommon for homeowners to be sued for injuries or damages to others, sometimes even when there is no evidence of negligence by the homeowner.  Personal Liability coverage provided by your Homeowners Policy usually provides coverage for these exposures.

You can also consider increasing your protection with a personal umbrella policy.  Not only will it increase your personal liability, but also your auto liability.  Limits are available from $1 million to $10 million and beyond.  The cost of umbrella coverage is usually very reasonable and often recommended if you have considerable assets.

Here are some steps you can take to reduce the danger of being underinsured:

  1. Read your policy. Certain property, such as jewelry, and certain perils, such as earthquake or flood, may be better insured separately.  Knowing what is covered (and how much) will help you insure properly.  If there is anything in the policy language you don’t understand, contact your agent and ask for an explanation.
  2. Review. At each annual renewal of your policy, you receive a new Policy Declarations page showing limits of coverage and optional coverages.  Review this information carefully and check for accuracy with your agent.  If you do any significant remodeling (i.e. add a family room, extra bedroom or bathroom, etc…), tell your agent about these changes so your coverage limits can be adjusted (as appropriate) to cover the improvement.
  3. Consider carefully whether your policy provides all the protection you need.  Does it provide coverage for extra costs resulting from building code changes?  Does it automatically increase coverage limits annually to keep pace with inflation?  Does it provide additional funds if the cost of rebuilding your home exceeds the policy limits?  These are all good questions to consider when you conduct your annual insurance review.  If you have an art collection, antique furniture, jewelry, or other valuable possessions, talk to you agent about supplemental coverages (such as fine arts or scheduled property endorsements) to adequately protect your investment in these items. The cost is modest for the extra protection, and often the deductible is waived.  Consider whether you should have more coverage for personal property (contents) than your policy provides.  Personal property coverage is usually 60-70% of the coverage limit for the structure.  Supplemental protection is available for a small additional premium.
  4. Inventory your home. Prepare an inventory of personal property items, update it periodically, and keep it in a safe place outside your home, such as a safe deposit box at your bank.  It will save you hours of time trying to list everything damaged or destroyed if you need to make a claim.  It will also help ensure you don’t forget some items.  CoSaint can help you find ways to simplify the job of preparing a personal property inventory (i.e. videotaping each room, content sheets, etc…).

The right coverage for you depends on your unique situation, so talk to CoSaint today to find out how to get the best price and value on home insurance for you.  Based in Charlotte, NC, CoSaint Insurance understands the home insurance needs of our customers.  CoSaint can help you evaluate your insurance needs, just give us a call at 877-529-8127 to speak with one of our agents.  We’ll work with you to estimate the replacement cost for your home / contents and the appropriate amount of liability (and other insurance coverages) that may be needed to protect your assets.