Do You Have Enough Homeowners Insurance?

Are You Sure You Have Enough Homeowners Insurance?


Wildfires in the West and the start of Atlantic hurricane season are compelling reminders that you might not have enough homeowners insurance or you have too much and you’re paying for insurance you won’t use.

“Don’t blindly trust that your insurance company has you fully covered,” warns United Policyholders, a consumer advocacy group. “An insurance salesperson’s main objective is to sign you up as a paying customer. In most cases, they will gather basic info from you, run it through a computer program, calculate your policy limits and give you a fast price quote.”

Your goal: Buy the right amount of “Coverage A” so you can afford to rebuild after a loss.

Here are four ways to figure out how much “Coverage A” you need:

1. The Software Method

It takes about 30 minutes to buy and use a do-it-yourself online replacement cost estimator. E2 Value “Pronto” ($25), Accucoverage ($8) and HMFacts ($7) are three products you can use.

2. Get a professional insurance appraisal.

Hire a building contractor or a professional home replacement cost estimator to estimate your rebuilding rebuilding cost. Ask your agent if your insurance company offers this service. If not expect to pay a few hundred dollars.

3. Let your agent do it based on full information about your home.

Tell a knowledgeable agent about your home’s detail and features and be sure to tell him about any valuable possessions or collections. Confirm in writing that your replacement coverage is adequate.

Buy the largest extended replacement cost endorsement you can afford, this extra coverage pays more than 100 percent of the cost to rebuild.

4. The Rough Math Method

Divide your home’s dwelling insurance limit by your home’s square footage. That’s how much per-square-foot money you’ll get from your insurance company.

Now, contact a contractor to find out the per-square-foot cost of rebuilding a home like yours.

Multiply your home’s square footage by the local cost per-square-foot to rebuild locally. How does that compare to your Coverage A limit?

If you need help finding a good insurance agent, contact me. I can refer you to a local expert.

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