Having insurance is a comforting thing. You can rest easy knowing that, should anything happen that would necessitate the replacement of your home and property, insurance has you covered. That is, of course, if you have enough insurance on your home and property. How do you determine how much insurance you need to have in order to be fully covered?
YOUR HOME: REPLACING THE STRUCTURE
If a windstorm would blow your home, garage and back deck all the way to the next county, what would it cost to rebuild the home, the garage and the deck? Insurance that covers the physical structure of your home is called “dwelling coverage” and the cost of replacing it is called “replacement cost.” You should at least be insured for this amount. Along with online calculators that are available, your local insurance agent can assist you in determining this amount.
YOUR STUFF: REPLACING YOUR PERSONAL PROPERTY
Personal property insurance covers your stuff – the things you own. This includes your furniture, appliances, clothing, electronic equipment and your bowling ball collection. This is called “personal property coverage.” Like dwelling coverage, you will want to know how much it would cost to replace every item that you own. The way to determine this is to make an inventory of your belongings and an estimated replacement cost for each.
YOUR FAULT: LIABILITY COVERAGE
Liability coverage is what covers your assets should someone be injured on your property. It’s what will pay for that person’s medical bills and for legal bills, should you be sued. 300,000 to 500,000 is a common amount. Talk to your independent agent for a limit that is right for you.
YOUR EXTRA EXPENSES: ALE COVERAGE
Additional living expenses (ALE) coverage covers any additional living expenses that you might incur because your home is unavailable due to a covered loss. This includes things such as hotel expenses while you wait for your home to be rebuilt, or the added cost of eating out every meal as opposed to buying groceries and cooking at home. This is usually based on the dwelling coverage you have and your agent will assist you with this amount.
Every few years you should re-evaluate your coverage, taking into consideration rising building costs, new building code standards, remodeled kitchens, additional rooms or structures and old or unique features that are difficult to replace. Your local independent agent can help you perform a checkup to make sure you are sufficiently covered.