How much should I cover my home for?
It is difficult to decide just how much insurance you need to have on your home to keep your family
financially protected. But the actual process of selecting appropriate figure is much simpler than you
might think if you break the idea of insurance down and apply its real purpose to your individual
Examining the Objective of Homeowners Insurance
Most of the time, the aim of the homeowner is to make sure that they have adequate insurance coverage
to be reimbursed should their home be completely totalled during an insurable event. Being made whole
is always chosen to being given half the value of your home-which would mean that you must either
supplement your insurance benefit in order to return to your lifestyle or that you must reduce your cost of
In addition to covering the value of your home it's likely that you want to insure the value of your contents
as well so that you are not made to cash out retirement and other savings in order to purchase furniture,
clothing and other needs.
Lastly, covering antiques, artwork and other valuables protects your interest in these pieces. While a
emotional bond to your belongings can never be fully replaced, the monetary worth of the item and the
money you've put into it, can.
What Goes Into Being Made "Whole"
You might think that being made whole by your insurance carrier means that you will get the sale value of
our home so you can fix up or purchase another, similar home. But there are actually many other
determinants involved in being made whole including:
Debris elimination: If the insurable event left debris around your home, this must be removed before
reconstruction can start. This is an extra expense that might exceed the value of your home but is
important to begin the process that will make you complete.
Following building codes: Over the years, as building materials change, the required codes for building
are updated too. The original windows that might once have been adequate may not be wind resistant
enough for your local building codes, so rebuilding your home may incur many costs that surpass the true
value of your former dwelling.
Catastrophe awareness: If a natural disaster is the result of your insurable event, then it's unlikely that
yours is the only home affected. That means that construction firms will be overwhelmed and may
increase prices to keep up with demand. These inflated costs may even exceed the limits on your policy.
When calculating the replacement cost of your home, you will want to keep this in mind.
Figuring Out the Right Amount for you
All of this information may do nothing more than make you concerned that you don't have enough home
insurance coverage. But being intimidated may lead to inaction, which is the worst step you can take.
Alternatively, develop a plan of action for calculating a reasonable amount of home insurance for your
1. Begin by getting a real estate appraisal. While this might be costly, it can give you a accurate idea
of the value of your home and the limits you should select.
2. Work with your agent: Your insurance agent can give you an estimate of the insurance
company's replacement cost for your home. A program by Marshall & Swift instantly measures data
including location and building costs and determines your likely replacement costs. This data could
change annually so it's important to ask your agent for updates when you renew your policy.
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3. Survey homebuilders: No one knows current prices for home building quite like those companies
that are actually doing it. Call a local home builder and tell them that you want a valuation so you can get
suitable insurance coverage. They may charge for the estimates.
Remember, protecting your family's largest and most important investment is your main concern when
buying insurance. While you may be satisfying the requirements of a lender by taking out a policy, that
should not be your only reason for doing so. Ensure that you and your family will have some financial
recourse should you encounter an insurable event should be your highest priority.
Contact us at 845-265-2220.