If you have finally bought your own home, the next critical step now is to protect your home by purchasing homeowners' insurance. But if this is your first time, chances are you have multiple questions about the amount of insurance you need. Here are four important questions to guide you before buying home insurance.
How Much Would You Pay to Rebuild Your Home If It Was Completely Damaged?
While this isn't the most pleasant question to ask yourself after you have just bought a new house, it's absolutely necessary. Disasters can and do happen, and you don't want to be caught unprepared. Generally, homeowners' insurance will cover your home from unfortunate disasters like fires, lightning, hail, and hurricanes.
Calculating the rebuilding costs of your home helps you take enough coverage so you're fully covered in case of a total loss. Your insurance company representative or agent has adequate knowledge about your neighborhood and the cost of construction materials and labor, meaning they can correctly estimate the rebuilding costs of your home.
How Much Would You Pay to Replace Your Personal Belongings in Case of a Total Loss?
Over the years, you have accumulated lots of personal property, including furniture, electronics, kitchen appliances, and clothing. But if these valuables were to be stolen or damaged, how much money is needed to replace them?
Most insurance companies will cover your personal property to about 50-70% of the insurance amount on your home's structure. Therefore, if your dwelling protection is $100,000, your personal property coverage should be $50,000 to $70,000. To know how much your personal belongings are worth, you can conduct a full home inventory.
Would You Need Additional Living Expense Coverage?
Most homeowners' insurance policies come with the Additional Living Expense (ALE) coverage. Assuming your home is destroyed in a fire, it will take some months before the house is fully reconstructed. However, that doesn't mean your life has to stop. You'll still need a place to live, meals to eat, and a commute to work.
The ALE takes care of your personal expenses, including your hotel bills, fare, and meals. The time limitation and amount of coverage will depend on your insurance company.
How Much Homeowners' Liability Coverage Do You Need?
Homeowners' liability coverage protects you from lawsuits for property damage or bodily injury caused by you, your family members, or your pets. For example, a visitor may slide and fall while in your bathroom and file a personal injury lawsuit. Your liability protection will cover the costs of defending yourself in court. Most policies also have a medical payments coverage that will cover medical bills under such claims.
A standard homeowners' policy will provide a liability limit of about $300,000 for injuries and property damage. If you need more liability protection, you can discuss umbrella coverage with your insurance company.
Share27 August 2021
