How Much Home Insurance Coverage Do You Need to Stay Protected?
Did you just buy your first home? Without the right insurance, you won’t be protected should something go wrong. Learn how much home insurance you need below.
95% of homeowner insurance claims are due to property damage – wind, fire, water damage, hail, and theft.
That’s because disaster can strike at any moment. A flood damages everything in your basement. A tree branch falls crushing your roof. A burglar breaks in and steals your valuables.
There are a lot of dangers out there for today’s homeowners.
But luckily, there’s something you can do to prepare! You can purchase homeowners insurance. But how much home insurance do you need?
Well, read on to discover our guide to answering that very question.
What Is Homeowners Insurance?
Homeowners insurance gives you financial protection in the event that there’s an accident or disaster that impacts your home. It protects in the case of things like fire, falling trees, etc.
It also provides protection from liability if someone is injured while on your property.
A standard homeowners insurance policy insures both the structure of your house as well as the belongings you have inside of your house. This means you’re protected in the case of a destructive event.
It also covers any injuries or property damage that may be caused by you or members of your family (including pets) to others.
For more information on how to protect your most valuable investment, check out this post.
What Isn’t Covered by Homeowners Insurance
Things like flood insurance and earthquake insurance tend to be on separate policies. So if you’re in an area where that kind of thing is common – or even a possibility – you should explore those kinds of policies in addition to your homeowners insurance.
Additionally, maintenance problems are your responsibility and aren’t covered by insurance.
The Different Parts of Homeowners Insurance
There are a few different parts of homeowners insurance:
Hazard Coverage: This sets the coverage amounts for everything except liability coverage and medical payments coverage. This part of coverage also includes personal property coverage, other structures coverage, and loss of use coverage.
Liability Coverage: This protects you if you’re found legally liable for something that happens on your property (like someone getting injured).
Medical Payments: This covers you if you end up having to pay the medical bills of someone injured on your property.
Why Do I Need Home Insurance?
The simplest answer is that it offers peace of mind. You’ll know you’re covered if something happens that would otherwise (most likely) wipe you out financially.
But it’s more than that. Many mortgage lenders require you to have home insurance. They want to make sure that their investment in your home is covered in the case of damage or other issues.
How Much Home Insurance Do I Need?
When it comes to your home – your biggest investment – you absolutely cannot afford to be underinsured. That’s why knowing exactly how much home insurance you need and finding the right policy is important.
What Is the Rebuild Cost of My Home?
Rebuilding of your home is the part that’s covered by hazard coverage. To discover the rebuild cost of your home, there’s a couple of steps you need to follow.
First, determine the cost per square foot in your area by contacting your insurance agent and local homebuilders. Once you have that price, multiply it by the square footage in your home and boom! That’s your house’s build price. After that, calculate how much it’s going to cost for materials, labor, etc.
What Do I Own?
This is where personal property coverage is important. What you own is going to make up a large portion of your claim – so you’re going to want to inventory everything you own, come up with the values, and calculate what it would cost to replace your items in the event of theft or damage.
Do this for everything you own so that you’re prepared in the event of the worst case scenario.
The only unfortunate thing is that personal property coverage doesn’t account for sentimental value. So be realistic in determining the value of your property.
Do I Need Additional Coverage?
This is where you determine if you need things like flooding or earthquake insurance. Again, these are not covered by standard homeowners insurance policies. If you’re living in an area that’s susceptible to floods or earthquakes, get additional coverage.
You should also consider water backup coverage. If a pipe bursts or leaks and it’s unexpected, then your homeowners insurance should cover it.
But if it’s a pipe that’s had it coming for a while… Homeowners insurance is going to leave you footing the bill.
This is where water backup coverage can be a lifesaver. So if you have old plumbing and pipes you should definitely consider it.
Can I Get Insurance With Bad Credit?
The short answer is yes. But the longer answer is that you’re going to have to do some finagling to make it happen.
Your credit impacts your insurance score and your insurance score impacts the rates you have to pay for your insurance. So you want to have your credit in as good of a place as possible in order to get a decent deal on your insurance rates.
But it’s not always that easy, and we know that. For more information on how to get insurance with bad credit check out this article by InsuranceHub.
Final Thoughts
Now that you know how to prepare for disaster and how much home insurance you need, you’re ready to go! However, just because you have homeowners insurance doesn’t mean you should stop trying to protect yourself from disaster. Check out this post on how to protect your home and make it as safe as it can be. And make sure that you’re staying on top of any issues that may arise in your home. After all, homeowners insurance only goes so far.
Thanks for this resource. Public adjusting, although extant in other states, is a serious and increasingly prevalent part of the claims process. New licensing rules and regulations have arisen for different cities.