Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
The amount of protection is normally a requirement of the lender and the insurance company. The lender will ask for enough coverage to have the house restored in the event of a loss. The insurance company will want the house insured for the cost of replacing the house. This generally establishes the Coverage A limit (Residence.) Coverage B (related structures) and coverage C (Personal property) are normally a percentage of Coverage A. This can be modified. Liability limits are usually your choice. This could be the most important part of the policy as a lawsuit can bankrupt you. Establish a relationship with a good agent, and they will guide you through the process.
Branch Owner, TWFG Insurance Services, Fremont California and the Greater Bay Area Representing Dozens of Insurance Carriers
It varies by state. In California you are only required to carry the amount of coverage needed to rebuild your dwelling (home) not what a lender requires. In California home values are often much higher then the actual construction costs of a home so meeting a lender requirement can mean over insurance you home in many cases. Of course this depends on the market you are living in.
You may first want to ask yourself the question, why am I buying homeowner’s insurance in the first place? The most common answer is, “should my home be damaged or destroyed, I’d like to have enough money to fix or replace it”.
So that is a good place to start. How much will it cost to rebuild your home should it be damaged or destroyed? It’s not an easy number to come up with but there are free tools available on the Internet to assist you with this effort (Google-Residential Replacement Cost Calculators).
Insurance companies normally do their own replacement cost estimates and will suggest or require certain minimum limits for specific types of coverage. Your lender, if you have one, may also have coverage requirements so your ultimate decision will be a combination of these factors.
Just remember, you are the one buying the coverage and paying the premium. Make sure your needs and expectations are considered.
The actual cost to rebuild your home will vary depending on local conditions following your loss. Hurricanes, tornadoes, wild fires and the like cause devastation to entire areas. Contractors, labor and materials may not be available at normal costs. Many insurance companies offer policies, which base the amount of insurance on normal building costs, but automatically increase the limit to whatever you need to rebuild your home should costs change dramatically following your claim. This feature is commonly referred to as “Guaranteed Dwelling Replacement Cost”, make sure to consider this feature if it is available.
Separate additional amounts of insurance will be included for your personal property, other non-business structures on your property and additional living expense. These limits are functions of the amount you carry on your home, normally they are more than adequate but make sure you are comfortable with them as they can be increased if necessary.
The other major part of the policy will be your personal liability limit. That limit should be consistent with the liability limits you carry on your auto(s) and not less than $300,000. If your net worth exceeds $300,000, you may wish to consider “Personal Umbrella” coverage. Personal umbrellas are considered a less expensive way to purchase high liability limits. In addition, they usually provide broader coverage and do not have as many exclusions or limitations as basic liability policies.
.JPG){kind=avatar}
Normal
0
You may first want to ask yourself the question, why am I buying homeowner’s insurance in the first place? The most common answer is, “should my home be damaged or destroyed, I’d like to have enough money to fix or replace it”.
So that is a good place to start. How much will it cost to rebuild your home should it be damaged or destroyed? It’s not an easy number to come up with but there are free tools available on the Internet to assist you with this effort (Google-Residential Replacement Cost Calculators).
Insurance companies normally do their own replacement cost estimates and will suggest or require certain minimum limits for specific types of coverage. Your lender, if you have one, may also have coverage requirements so your ultimate decision will be a combination of these factors.
Just remember, you are the one buying the coverage and paying the premium. Make sure your needs and expectations are considered.
The actual cost to rebuild your home will vary depending on local conditions following your loss. Hurricanes, tornadoes, wild fires and the like cause devastation to entire areas. Contractors, labor and materials may not be available at normal costs. Many insurance companies offer policies, which base the amount of insurance on normal building costs, but automatically increase the limit to whatever you need to rebuild your home should costs change dramatically following your claim. This feature is commonly referred to as “Guaranteed Dwelling Replacement Cost”, make sure to consider this feature if it is available.
Separate additional amounts of insurance will be included for your personal property, other non-business structures on your property and additional living expense. These limits are functions of the amount you carry on your home, normally they are more than adequate but make sure you are comfortable with them as they can be increased if necessary.
The other major part of the policy will be your personal liability limit. That limit should be consistent with the liability limits you carry on your auto(s) and not less than $300,000. If your net worth exceeds $300,000, you may wish to consider “Personal Umbrella” coverage. Personal umbrellas are considered a less expensive way to purchase high liability limits. In addition, they usually provide broader coverage and do not have as many exclusions or limitations as basic liability policies.