You need enough home insurance to cover the cost of rebuilding your home at current construction costs.
While your lender may require that you purchase enough to cover the amount of your mortgage, it may not be enough to cover totally rebuilding your home.
Homeowner’s insurance pays to repair or rebuild your house, attached and unattached structures (garage, deck, porch, etc) due to fire, lightning, etc. In addition, hotel costs are covered while repairs are being made, and personal belongings.
Replacement cost policies
Most policies cover replacement cost for damage to the structure. A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality. There is no deduction for depreciation–the decrease in value due to age, wear and tear, and other factors.
If you own an older home, you may have to buy a modified replacement cost policy. This means that instead of repairing or replacing features typical of older homes, with similar materials, the policy will pay for repairs using the standard building materials and construction techniques in use today.
Do a Home Inventory
Most homeowners insurance policies provide coverage for your personal possessions for approximately 50 percent to 70 percent of the amount of insurance you have on your home. To determine if this is enough coverage, make a detailed list of everything you own. (for more information see How to create a home inventory). If you think you need more coverage, contact us and ask for higher limits for your personal possessions.
Hometown Insurance Center will help you determine the details of your homeowner’s coverage. Start by filling in the quote form on this page or by calling us.