Home insurance is an essential part of home ownership and is a cost usually considered as part of the regular maintenance and protection of your home. If you have a mortgage, it will also be required by your mortgage lender. But how much home insurance do you really need? And what types of coverages should you be aware of? Here are some common questions and comments I review with my clients:
How much should I insure my home for?
When selecting the amount of coverage for your home you will want to consider several factors. First consider the materials you will need to rebuild your home. Is the home constructed with concrete block or wood frame? Is the roof shingle or tile? Are the interior finishes builders grade or more high end? These are some questions you will want to take into consideration. Next, keep in mind the square footage of your home. The larger the home, the more it will cost to replace. Finally, keep in mind that the cost to build a new home and the cost to rebuild an existing home after a catastrophic event may be very different. After a major event, such as a hurricane, tens of thousands of homeowners will be rebuilding their homes at the same time. Because of this, materials and available labor can be hard to find. With little supply and high demand the cost to rebuild can increase quite dramatically over the normal costs.
Do I Need Additional Content Insurance?
Most homeowner's policies provide 50% of the dwelling limit for personal property and some give the flexibility to increase or decrease this percentage. While 50% may be okay for some, it may not be correct for your particular situation. Keep in mind you will want to cover the costs to completely replace your furniture, clothing, and other personal possessions. You have the option to have these personal possessions reimbursed at Actual Cash Value or Replacement Cost. Actual Cash Value factors in depreciation, while Replacement Cost provides the cost of replacement. For a small additional premium, the Replacement Cost option can be selected.
Do I Need Liability Coverage?
You can be personally held liable for a number of things. For example, you may be held liable if someone is hurt on your property or if your child
causes property damage or bodily injury to another person. Both of these examples could lead to a lawsuit that could jeopardize your financial position. Having adequate liability coverage on your homeowner's policy can protect you from losing your assets if you are sued.
Keep Flood Insurance in Mind
Damage from flooding is not covered by your homeowner's insurance policy. To have flood coverage, you will need a separate flood insurance policy, typically costing around $400 per year. Compared to the cost of a homeowner's policy, and considering we live in Florida, this is a very good value.
Please contact me today to review your homeowner's insurance needs!