Many homeowners insurance companies provide coverage for disasters such as damage due to fire, lightning, hail and explosions. If you are living in areas where there is a high risk of flood or earthquake, you will need coverage for those disasters. You should increase limits on your policy to be high enough to cover the cost of rebuilding your home. And if the limit of your insurance policy is based on your mortgage, it may not cover the cost of rebuilding in case of demage.
While purchasing a suitable insurance coverage, ask your agent for your possible coverage limits that meets with your house needs and requirements. Make sure your home has the right amount of structural coverage.
Major factors that will impact home rebuilding costs
- Local construction costs
- The square footage of the structure
For a quick estimate of the amount of insurance that you need, simply multiply the total square footage of your home by local, per-square-foot building costs. To find out the average construction cost in your area, you can call your local real estate agent. Your area location and age of your home will definately affect your premium. High risk factors, such as swimming pools and trampolines will increase those rates.
Details that can impact home rebuilding costs
- The type of exterior wall construction—frame, masonry (brick or stone) or veneer
- The style of the house, for example, ranch or colonial
- The number of bathrooms and other rooms
- The type of roof and materials used
- Other structures on the premises such as garages, sheds
- Special features such as fireplaces, exterior trim or arched windows
- Whether the house—or a part of it—was custom built
- Improvements you’ve made that have added value to your home, such as the addition of second bathroom, or a kitchen renovation
Whether your home is older with hard-to-replace features
If you are living in an old age home, then you must have to buy a modified replacement cost policy. Modified replacement cost policy will pay for repairs using today’s standard building materials and construction techniques.
Conduct a home inventory of your personal possessions
It’s highly advisable to conduct a home inventory, if you want to measure the value of what you own.
How to create a Home Inventory?
Pick an easy spot to start –
A small place to get started is your small kitchen appliance cabinet, your sporting equipment closet or your handbag shelf.
List recent purchases –
Make a list of your recent things that you recently purchased for your home.
Count clothing by general category –
Count your all clothes by general category. For example, “5 pairs of jeans, 3 pairs of sneakers…” Make note of any items that are especially valuable.
Check coverage on big ticket items –
You may also need an extra coverage for your jewelry, art and collectibles may have increased in value from your standard homeowners insurance policy.
Keep proof of value –
Store sales receipts, recent purchase contracts, and appraisals with your list.
Determine how much liability insurance you need
Simply, You should have enough liability insurance to protect your assets. Homeowners insurance covers for bodily injury or property damage. Most standard homeowners insurance policies provide a minimum of $100,000 worth of liability insurance coverage, but higher amounts are available as well, it is recommended that homeowners consider purchasing at least $300,000 to $500,000 worth of liability insurance coverage. If you have a property more than your liability coverage limits, you must have to purchase an extra liability or umbrella policy.