When purchasing a home, making sure you have the right amount of home insurance coverage is important. But how do you know how much is enough? The goal of homeowners insurance is to protect your home and its possessions from damage or theft, including rebuilding from total destruction, otherwise known as "total loss." Total loss coverage varies based on home and location but is essentially determined by an estimate of how much it would cost to rebuild your home. If you have a mortgage on your home, many lenders require your coverage to equal 100% of the home replacement cost.
Another factor to consider when shopping for homeowners insurance is coverage for the items inside your home. There are tiers of coverage available depending on the replacement cost of items in your home. In some cases, your insurance agent will offer additional coverage for expensive items such as jewelry or artwork. It is important to talk to your insurance agent and make sure that you fully understand what your policy covers.
As you look at different policies, pay attention to the deductible and coverage limits. The deductible is the amount you will be required to pay out of pocket before the insurance kicks in, and the coverage limit is the maximum amount that your insurer will pay when a claim is filed. If your home is in an area that is prone to flooding or earthquakes, you will need an additional plan for this coverage.
If you are interested in purchasing a home, I would love to speak with you about your financing options as well as refer you to one of my trusted partners in the homeowners insurance industry. Call me today to set up an appointment.