Homeowners Insurance Coverage – How Much Should You Have?

Homeowners Insurance Coverage - How Much Should You Have?

This is the second post in our series on “Homeowners Insurance, What You Need to Know”.

When seeking the best homeowners insurance coverage for your house and for your possessions, you might think that the insurance company’s walk-through cost estimator of your insurance needs will make the decision for you. But there are details that you need to think about and factor into your home insurance decisions as well.

After all, there is no one model to follow when it comes to amount of coverage that is right for your home as it is now, and for any future plans you have for it.

How much coverage should I buy?

The answer that question effectively depends upon the particulars of your home, inside and out. Some examples to be covered include:

  • Dwelling – Home insurance dwelling coverage pays for any damage or destruction to your home and any attached structures, such as an attached garage.
  • Non-attached structures – Home insurance coverage can pay for damage to fences, a freestanding garage, perhaps a shed or any other non-attached structure should you need it.
  • Personal property – If covered, your home insurance policy could pay for lost or stolen personal belongings. In addition to your flat-screen TVs, furniture and clothing, think about valuable collections you might own. These can be specifically added to your policy.
  • Loss of your home’s use – If you have damage caused by broken pipes, a septic issue, mold, water damage or other damage that renders it uninhabitable as remediation occurs, your insurance may cover the costs for you and your family to stay elsewhere, as needed.
  • Personal liability – A homeowners insurance policy may offer financial protection if you are sued and held responsible for another person’s injuries that occurred on your property. Think about occasions when you entertain. If a guest trips on your uneven pathway or steps and suffers an injury, the responsibility would be yours.

It’s quite a lot to worry about.

A solid home insurance policy fine-tuned by you – because no one else knows your home and its use better than you do – could achieve higher-quality coverage for your peace of mind as well as for your finances.

Should your coverage change over time?

Additions and renovations to your home will dictate whether you need to increase your homeowners insurance coverage.

Let’s say you plan to build an addition onto your home to enable your parents to come to live with you, as is often the case as Baby Boomers retire or have health issues. This addition will increase the value of your home.

Or you’re planning to construct an outdoor deck. You might not think about that entertaining space as a ‘living area’ that needs to be covered by insurance. But there are risks of damage, destruction or injury that can occur there. You’d have to let your insurance company know about that deck in order to have it fully covered as part of your living space.

How do you determine the right homeowners insurance coverage?

Your financial professional can help connect you with a top-quality home insurance agent. They can offer advice for situations you might not think about that may require additional coverage such as flood or earthquake coverage. Together, you can assess your home insurance policy needs for coverage of:

  • Your home’s repair or rebuilding
  • Replacement of your personal possessions
  • Financial protection in case of liability

And more.

You’ll determine the highest deductible you can afford, assess for what inflation can potentially do in the future, and think beyond the Now to get coverage for your future projects.

How do you ensure that the cost estimates used to determine your coverage are accurate?

The best way to discern your homeowners insurance needs is to have your insurance agent come to your home to run a cost estimation for you. This way, they see everything first-hand, and you’re right there with them to ask any questions you have about your additional, perhaps unexpected, insurance needs. As an extra benefit: it’s documented that an insurance agent did indeed come to your home and property. This could come in handy someday when and if the amount of coverage you are carrying comes into question usually at a time of a loss.

Many homeowners insurance companies say that they can just figure everything out over the phone but I don’t agree. Determining the amount of coverage you need to carry can be complicated. That is why doing things over the phone or through the internet for that matter can be dangerous.

If your agent is unwilling to coming to your home, find someone else who will because this is the only way to really know you are carrying the right amount of coverage. If necessary your financial advisor will be able to provide you with a list of qualified, reputable insurance agents who will take the time and make the effort to walk through your home to do an in-person cost estimation.

This helps avoid the types of monumental insurance coverage mistakes that I see all too often. If a homeowners insurance policy is filled with guesses and incomplete information, there will likely be a tremendous amount of under-insuring or over-insuring, neither of which work in your best interest.

Yes, it is certainly easier and quicker to ‘take care’ of your home insurance cost estimation over the phone, or perhaps even over an online chat but wouldn’t knowing you were ‘adequately-covered’ help you sleep better at night?

Get the coverage you need

Homeowners insurance needs can be daunting. But with a quality financial professional by your side to help you connect with a quality home insurance professional, you’ll be teamed up for a custom home insurance policy plan that protects your home investment, as well as those unexpected things that can pop up in time.

Listen to our podcast here for more information. Contact me with any questions you might have as you work toward protecting your home, your property, your finances and your family with a smart homeowner’s insurance policy.