Things to be Aware of Regarding Homeowners Insurance
How much insurance do you need?
When determining the amount of insurance to purchase, there are several different limits to consider. The policy limit that is generally selected first is the amount of insurance on your house. This amount should equal the cost of rebuilding your home in the event that it was destroyed, and may be less than the market value of your home, since the market value includes the value of the land. Your producer may be able to help you determine the amount of insurance that is appropriate for your home. If you have a mortgage on your home, the lender will probably require that you carry an amount of insurance that is it at least as high as your mortgage.
The limits of insurance on other structures and on the contents of your home are generally expressed as a percentage of the limit on your house. You should check with your producer as to what those amounts are. If you have a particularly expensive detached garage or if you have a house full of antiques, you may want to raise the limits on the other structures or contents coverages.
The other significant policy limit to consider is the liability limit. This limit should be high enough to protect you from lawsuits resulting from your negligence. If you carry an umbrella policy, that policy probably specifies minimum liability limits for your homeowners policy.
Flood and Earthquake Damage Not Covered
It is important to be aware that a standard homeowners policy does not provide coverage for damage due to floods or earthquakes. Insurance for these two perils may be purchased separately and as discussed earlier in this section.