Your home is probably the biggest investment you’ll ever make, it makes sense to take measures to protect that valuable investment. The best way to safeguard your home investment is through homeowner’s insurance.
Don’t settle for just any homeowners insurance policy. Your home and your homes contents are unique and the amount of insurance you need depends on this and your personal requirements. But how much insurance is enough?
Here are a couple of ways for you to determine how much home owners insurance coverage is right for you:
Market value may not be enough
While it might be tempting to buy just enough homeowner’s insurance to cover the resale value of your home, this may be too low.
Your home’s market value may be very different than what is known as its “replacement cost.” The replacement cost of your home is the amount of money you would need to rebuild your home to its previous condition if a total loss were to occur.
In today’s real estate market property values are falling throughout the country. Due to this it is more important to protect you home for what it will cost to rebuild your home.
Calculate the replacement cost
Your homeowner’s insurance company can calculate how much it will cost to rebuild your home based on the following:
- Square footage of your home
- Type and quality of your home’s construction
- Any updates, special features or add-ons to your home
- Quality and cost of materials used in your home
Personal liability coverage
Modern homeowner’s insurance policies also include personal liability and medical expense coverage. There is usually a preset dollar amount of coverage for these two items so; you might want to consider purchasing a separate personal umbrella liability policy, which can offer additional protection.
An umbrella policy offers a higher level of liability coverage and ensures that you and your family’s assets will be protected if someone sues you for damages. Umbrella policies typically pay up to a predetermined limit, which is usually purchase in increments of $1 million.
Protect your valuables
If you have valuable jewelry, artwork or collectibles, you may want to opt for even more homeowner’s insurance coverage for additional protection. You may assume your valuables are fully covered by your homeowner’s insurance, but that’s not always the case. To be safer it may be wise to schedule these items separately for there estimated worth