Homeowners Insurance Coverage

Your home may be the biggest investment you’ll ever make. A serious homeowner will want to protect that investment. Here is some valuable information to consider when determining how much home insurance coverage you need.

Minimum Coverage

Minimum coverage on a home insurance policy will be calculated on your home’s estimated replacement cost, so keep in mind that replacing your home in the future could cost more than its current value. Estimating replacement costs is important because it ultimately determines which policy options are available to you. It’s impossible to predict today what the exact cost will be to replace your home in the future. An appraiser or general contractor can help you determine the estimated value of replacing your home. This will ensure that you have enough home insurance coverage to account for unforeseen circumstances.


Market Value vs. Replacement Cost

Market value is the amount a buyer pays for your home on the open market. In most cases the market value also includes the land.


Replacement cost is the cost to repair or replace the entire home. Replacement cost has to be estimated because it is something that cannot be predicted. One of the most common variables that affect replacement costs is an increase in building materials and labor costs over a number of years.


Replacement Cost Estimate

When you are purchasing insurance make sure you determine the appropriate amount of coverage needed. The replacement cost of your home will affect your Homeowners Insurance Quote as it shows the total amount of coverage.  General contractors and professional replacement cost appraisers can help you in obtaining an estimated replacement cost. Estimates should reflect all of your home’s finished features, including architectural details and unique building materials, upgraded bathrooms or kitchen (including cabinets), finished or partially finished basement, additional rooms or living spaces, any custom molding or windows, and any other unique features.

If you’re unable to obtain a detailed estimate from a contractor or professional appraiser, your agent is a good resource to discuss other options to determine these replacement costs.

Keep your Insurance Coverage Current

Have you remodeled or improved any features of your home?

Upgrades or improvements to your home may increase its estimated replacement cost. Your agent can help you adjust your policy to ensure you have sufficient coverage to replace these improvements or upgrades.

Has the rate of inflation risen since your last appraisal?

Severe weather and major catastrophes can increase the demand for labor and materials and raise costs beyond normal inflation. It’s important to update your home insurance coverage amount each year to keep up with the changing economy.

How do building costs influence market value in your area?

Market conditions can certainly affect how much it will cost to rebuild your home if you experience a loss. Replacement cost estimates are greatly influenced by supply and demand of labor and construction materials. It’s important to keep up with current market conditions in your area so you can keep your home insurance coverage at least equal to 100% of your home’s estimated replacement cost.

Homeowners Insurance only pays if your loss is caused by an event that your policy covers. For example, if the damage to your home is due to flooding and your homeowners policy doesn’t cover floods, then your policy won’t pay for the loss of your home. We will go over your policy with you to ensure that you know what you are covered for and what you are not covered for long before any disaster strikes. Is it possible that your home will be struck by a tornado? Are you covered? Here are some of the basics covered by most policies:


  • Dwelling: Pays for damage to your house and to structures attached to your house. This includes damage to fixtures, such as plumbing, electrical wiring, heating and permanently installed air-conditioning systems.
  • Other Structures: Pays for damage to fences, tool sheds, freestanding garages, guest cottages and other structures not attached to your house.
  • Personal Property: Reimburses you for the value of your possessions, including furniture, electronics, appliances and clothing, damaged or lost even when they aren’t on your property, such as those at an off-site storage locker or with your child at college.
  • Loss of Use: Pays some of your additional living expenses while your home is being repaired.
  • Personal Liability: Covers your financial loss if you are sued and found legally responsible for injuries or damages to someone else.
  • Medical Payments: Pays medical bills for people hurt on your property or hurt by your pets.

With the right company and agent you can navigate the waters of homeowner’s insurance and feel confident that you are getting the right homeowners insurance coverage to protect you and your family’s home and property.


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