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Wednesday, 17 July 2019
Agent Resource Center
This Old House - Do-it-Yourself

How Much Home Insurance Do You Need?

Written by Posted On Saturday, 25 May 2019 11:20

Homeowners insurance covers every single possible thing that could happen to your home. In addition to BST auto insurance, homeowners’ insurance can cover you if the unthinkable happens and your home falls prey to an unexpected natural disaster or an accident. Having the right amount and type of homeowner insurance is essential to ensure that you're covered if something like this happens. Insurance Information Institute mentions that as many as 95% of all homeowners invest in insurance, as a means of protecting their property assets. When talking about homeowners’ insurance, we need to break the umbrella term down into each type of coverage and what they provide.

Personal Property Coverage

Personal property coverage, as defined by Allstate, is coverage that protects your possessions. It can even go as far as covering the food that you have stored in your refrigerator. When considering the amount of personal property coverage you're going to need you should first question yourself about the amount you'd need to replace every single possession you have. A lot of people tend to underestimate the value of their earnings, and when asked to determine a value, they usually represent a figure that's far less than those items are actually worth. The first step in figuring out how much personal property coverage you need is to perform an inventory of all your personal possessions and find out their individual values. This process may be time-consuming but would ensure that, in the event of a disaster, you'll be able to replace your belongings. Personal property coverage has limits, however. More expensive items like collectibles or jewelry may require separate coverage based on their value.

Homeowners Liability Insurance

Investopedia mentions that homeowners’ liability insurance applies to any injuries that may take place on your property, once the person who is injured is legally on the premises. Liability for these issues may fall on the property owner, and it's in your best interest to have insurance in case someone tries to bring a suit against you. These legal battles can be expensive and drawn out, and liability insurance can cover the cost of the legal fees or medical bills if such a situation arises. It should be noted, however, that dogs don't fall under the coverage of liability insurance, and if you own a breed that falls under the category of 'dangerous dog,' you may require additional coverage in case he or she bites someone. Consulting your insurance provider will help clear up the specifics of this matter.

Dwelling Coverage

The Texas Department of Insurance tells us that dwelling insurance exists to deal with situations that arise where your house is damaged or destroyed by anything that's covered in the policy. Ideally, your dwelling coverage should equal the cost of replacing your entire house. It can be estimated by using the square footage of your home and roughly calculating the construction costs for a ballpark figure. More precise values can be obtained from online calculators, or from hiring a professional to provide an estimate. The cost of replacement would vary based on the types of improvements that you have made in the recent past that change the original house design. Things like new kitchens, cupboards, and even additional rooms all add up in the final figure you want for your dwelling coverage. Taking these things into consideration may mean the cost of the house now would be considerably more than when initial construction happened.

Additional Living Expenses (ALE) Coverage

While all the previous insurance coverage categories directly dealt with rebuilding and replacing the house after a disaster, this one deals with maintaining your standard of living while you recover from an accident. The Balance defines ALE coverage as compensation provided to you if your house is damaged or being repaired after a disaster to cover the additional cost of living out of your home. It should be noted that while the policy does include things like renting temporary rooms, it only kicks in if the cost of those rooms is more than your regular living expenses during the period in question. A lot of policies that offer ALE coverage use a percentage of the extended dwelling insurance to calculate an estimate for the ALE coverage.

Can You Have Enough Insurance?

While it might be tempting to say that you're adequately insured, the fact remains that you can never have enough insurance. However, realistically, you can't invest all your money in insurance because it's hedging bets on a disaster that may never come. Knowing where you can safely cover your expenses and the cost of rebuilding is a safe estimate for the ideal amount of insurance that you need. Homeowners insurance fills a need for those of us who own property to have some peace of mind. In the event of an accident or disaster it's comforting to know that your investment is protected and can be rebuilt, possibly even better than the original.

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