You buy homeowners insurance to protect one of your biggest assets, so it’s important to purchase enough coverage to suit your needs. By looking at a few key factors, you could end up saving yourself a lot of money and heartache should you ever have to make a major homeowners insurance claim.
We asked one of our insurance experts, John Biddle, to answer some of the commonly asked questions raised about home insurance:
1 – What is replacement cost and how is it calculated?
“Replacement cost is how much it would cost to rebuild your home if it is damaged or destroyed. The cost to rebuild can often be very different from market value due to the value of the land and the current state of the housing market. Your insurance is covering the cost to rebuild the structure, and sometimes that cost is more and sometimes less than market value. It’s important to go over the details of the home with your agent and make sure your coverage is adequate.”
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2 – How much will it cost to replace my personal possessions?
“People often underestimate the amount of ‘stuff’ that they have. When you consider all of your clothes, furniture, appliances, toys, electronics, etc., it can add up pretty quickly. In general, the amount of personal property coverage is tied to the total homeowners coverage you have. You can customize the amount of coverage based on the value of your personal possessions. The best way you can determine the amount of coverage you need is by creating a home inventory and estimating the value of your belongings.”
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3 – What is coverage for additional living expenses and do I need it?
“A sizable loss can often impact your ability to live in your home while repairs are being made. Luckily, most homeowners policies have coverage for additional living expenses built into the policy. This will pay extra travel costs, extra food costs, and hotel/accommodations that you otherwise would have to pay if you were not covered.”
4 – How much coverage do I need in the event I am named in a lawsuit for bodily injury or property damage caused to others?
“A lawsuit falls into the category of Coverage E – Personal Liability. At our agency, we write homeowners policies with a limit of at least $300,000, though more often we will write for $500,000. Depending on your situation, it may also be beneficial to purchase an umbrella policy which increases your limits of liability by $1 million or more.”
Talk with your Leavitt Group insurance advisor to discuss your homeowners insurance and ensure you have the right coverage for your needs.