If your house is destroyed or in need of extensive repairs due to an accident or natural disaster, you will at least find some comfort in knowing that you purchased enough homeowner’s insurance to completely replace the structure, furniture and valuables inside if necessary. How do you really know you have the right amount?
First and most importantly, get complete replacement coverage as opposed to coverage for the cash value. If you have an older home, this may be more difficult to obtain for many reasons. But in that case, get a quote for insurance that includes enough cash to rebuild the house to today’s building codes and your accepted standards. Keep in mind, over the years you can lose track of the cost of replacing a home and the valuables you have accumulated. Doing a periodic inventory of items will help you assess accurately whether you have enough insurance to cover their loss and taking pictures of rooms and items can also be a useful reminder in the event of such loss.
Homes damaged by flood are not generally a part of a homeowners insurance policy. It is, however, possible to obtain additional insurance for flood damage through the national flood insurance program.
If your house is in need of either extensive repair or total replacement, you will likely incur the costs of living elsewhere while the work is being completed. You may need to stay in a hotel for a few days, or you may end up renting another home for a year. In the aftermath of natural disasters, labor and material costs can go up substantially making it difficult to get work completed in a timely way. It is therefore important to get a homeowner’s insurance quote that includes paying above the policy value if this becomes necessary.
Liability is another area of great concern for homeowners. This addition to homeowner’s insurance protects against law suits should someone be hurt on your property or by you. Your homeowner’s insurance should provide enough for your legal defense, as well as paying for damages, which can be substantial. This addition to homeowner’s insurance can protect your other assets and investments. It is generally recommended, that you purchase more liability coverage than is in most standard policies.
Be sure to obtain at least three quotes from different insurance companies to get the best possible premium price and there are other ways to save money. One simple way to lower the cost for homeowners insurance, is to raise the deductible. Ask the company providing you with the homeowners insurance quote for all available discounts. An annual review of your coverage should reveal any deficiencies. Study the policy differences carefully and make sure you ask questions about anything you do not fully understand, before signing on the dotted-line.