Lenders require homeowners to carry insurance so that they can be sure to recoup their loss should your home be damaged in some way. So unless you paid cash for your house -- and even if you did -- homeowners insurance is a necessity. But how much do you need? The simple answer is that it depends.
Before going insurance shopping, know the value of your home. A builder, real estate agent, or insurance agent should be able to help you determine this. Be sure to include in the value rare or unusual elements in your home, like built-ins, a particularly expensive bathtub or kitchen appliances, or glasswork.
There is a menu of different types of insurance policies, and your insurance agent will help guide you to the one that best suits your needs. Be sure you purchase a policy that covers 100% of your home’s value. If you insure only 90% of your home’s value, you’re taking a gamble that your home never will be a total loss. But wouldn’t you hate to lose that bet? Guaranteed replacement cost will cover the cost of rebuilding your home, even if builders’ rates are inflated because of a disaster that affects many homes in your neighborhood.
If you live in an area prone to flooding, it’s a good idea to purchase flood insurance. The same goes for other natural disasters, like hurricanes, tornadoes, and earthquakes. Standard policies won’t cover damage from these events.
If you operate your small business out of your home, keep in mind that your insurance will only replace your business property up to a certain amount. If you keep a lot of equipment or inventory at home, it’s a good idea to purchase separate coverage.
The same goes for extremely rare or valuable possessions. If you have expensive instruments, jewelry, electronics, antiques, or other collectables, purchase a separate policy that covers them. A standard homeowners insurance policy will only cover a portion of valuables.
It’s important to have a good relationship with your agent who will walk you through the homeowners insurance decisions. Contact us today to discuss your options!