Home insurance is really pretty simple. There are 6 basic coverage parts:
Coverage A: Dwelling(the actual home)
Coverage B: Other Structures(any detached buildings)
Coverage C: Personal Property(your "stuff")
Coverage D: Loss of Use
Coverage E: Personal Liability(if your sued)
Coverage F: Medical Payments
Coverage A, the dwelling, is the coverage that the other property coverages are calculated from. The right amount depends on the home and how you want claims to be settled. The two basic settlement options are Replacement Cost or Actual Cash Value. Replacement cost is the amount it would take to rebuild your home just like it is. Actual Cash Value is the amount your home is worth.
Most people want their home replaced if it's damaged so most will use Replacement Cost. There is an industry standard estimator that insurance companies use to estimate this. Your insurance agent will be able to estimate this based on the construction and features of your home. Actual Cash Value will take that number and depreciate it.
Getting the dwelling amount right is the most important calculation for your insurance. Coverage B is usually 10% of Coverage A and Coverage C is usually anywhere from 50%-75% of Coverage A. Coverage D can be anywhere from 20% of Coverage A to unlimited. Every company is different.
Coverage E is also a very important coverage as this protects your assets in the case someone sues you.
How much is right for you? I usually insure the home for it's replacement cost and I usually recommend a Personal Liability Limit of at least $500,000.
Find an agent you can trust and he/she will be happy to show you many different options and how that computes to premiums. Then you can make an informed decision.
Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
Short answer is the amount that is correct to adequately cover your Home, Personal Property and Liability exposure.
The primary element of a Homeowners policy from which most of your premium is driven is, of course, the stated Dwelling Amount. Thjis is not an arbetrary number, but should be based upon the careful inspection of your home and the completion of a Reconstruction Analysis. Your Insurance professional can work with you and make the proper recommendation. Once that is determined, the stated Personal Property coverage amount will become a percentage of the Dwelling amount. Finally, choose the amount of Liability coverage that best suits your financial exposure as this is protection against any possible action or inaction for which you may be held legally liable.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
The correct way to evaluate your need for coverage is to assume that you return home tonight to a smoking pile of rubble sitting on the foundation of what was your home. You also know that a firefighter was injured in the blaze. How much do you want? I suspect you want to rebuild your home, replace your personal property, have a comfortable place to live while repairs are being made and defend any lawsuit that might arise. That is how much insurance you need.
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Coverage A: Dwelling(the actual home)
Coverage B: Other Structures(any detached buildings)
Coverage C: Personal Property(your "stuff")
Coverage D: Loss of Use
Coverage E: Personal Liability(if your sued)
Coverage F: Medical Payments
Coverage A, the dwelling, is the coverage that the other property coverages are calculated from. The right amount depends on the home and how you want claims to be settled. The two basic settlement options are Replacement Cost or Actual Cash Value. Replacement cost is the amount it would take to rebuild your home just like it is. Actual Cash Value is the amount your home is worth.
Most people want their home replaced if it's damaged so most will use Replacement Cost. There is an industry standard estimator that insurance companies use to estimate this. Your insurance agent will be able to estimate this based on the construction and features of your home. Actual Cash Value will take that number and depreciate it.
Getting the dwelling amount right is the most important calculation for your insurance. Coverage B is usually 10% of Coverage A and Coverage C is usually anywhere from 50%-75% of Coverage A. Coverage D can be anywhere from 20% of Coverage A to unlimited. Every company is different.
Coverage E is also a very important coverage as this protects your assets in the case someone sues you.
How much is right for you? I usually insure the home for it's replacement cost and I usually recommend a Personal Liability Limit of at least $500,000.
Find an agent you can trust and he/she will be happy to show you many different options and how that computes to premiums. Then you can make an informed decision.
The primary element of a Homeowners policy from which most of your premium is driven is, of course, the stated Dwelling Amount. Thjis is not an arbetrary number, but should be based upon the careful inspection of your home and the completion of a Reconstruction Analysis. Your Insurance professional can work with you and make the proper recommendation. Once that is determined, the stated Personal Property coverage amount will become a percentage of the Dwelling amount. Finally, choose the amount of Liability coverage that best suits your financial exposure as this is protection against any possible action or inaction for which you may be held legally liable.