Adequate Homeowners Insurance Coverage

The probability your homeowners insurance will be needed for protection from a) burglars, b) fire, c) weather, d) vandalism or e) any other event depends on 1) what neighborhood you live in, 2) electrical wiring, fire prevention and bad habits, 3) the meteorological patterns in your area, and 4) any other risk probability contributors that statistically increase your chance of requiring homeowners insurance for these occurrences. If your property is mortgaged, your mortgage lender may require homeowners insurance as a condition of the loan.

I: Property appraisal and Upgrades

The total market value of your home and the property inside the home should not greatly exceed the value of your homeowners insurance coverage as this would be a redundant expense. Carefully assess the retail value of your property and its contents to determine if your homeowners insurance has used correct valuation in their assessment. Also, checking to see if your homeowners insurance is linked to home appreciation and/or inflation because coverage amounts for one year may not be adequate coverage for the next if market conditions change.

Upgrading your home can also affect the value of your personal real estate. If you do upgrade your home retain relevant financial documents pertaining to the upgrade and contact your insurer to inform them of the increase in your home’s value. This may increase the cost of your premium, but it will also properly ensure you have sufficient coverage.

II: Property risk assessment

Risk assessment is what insurance companies use to determine the cost of your insurance. You too may want to consider your own risk assessment so you can adjust your homeowners insurance coverage appropriately. Being on the ground, living in a home, and knowing the neighborhood gives you the homeowner insights that might not be known by the insurer. Use this to your advantage by a) determining if property covered by the insurance is worth as much as it is insured for, b) if the property is really as subject to potential dangers as the insurance company thinks and c) if the insurance company has undervalued or underestimated certain risks.

If you have expensive landscaping such as valuable trees, mason work, or statues, ensure these items are adequately covered if you value them enough and/or consider them to be of significant relevance to the value of your property. Fencing, and underground plumbing not in the jurisdiction of your city may also be a problem if pipes freeze or break. Essentially, determine if everything is covered, and if not, if these features of your property are subject to sufficient amount of risk, damage and loss.

III: Umbrella Insurance

If you feel and determine you need umbrella insurance to protect you from hazards and dangers not covered by your standard homeowners insurance, then consider it in terms of risk, need, comfort and cost. Umbrella insurance fills the gaps that regular homeowners insurance doesn’t cover.

Your insurer can answer additional questions about umbrella insurance. Flood insurance is not always included in standard homeowners insurance, but may be required by the Government if you live in a high-risk area. Information on this requirement is available from the Federal Emergency Management Agency (FEMA).

IV: Tips to consider when assessing homeowners insurance

To assess if your homeowners insurance provides adequate coverage also involves a) knowing what your homeowners insurance protects you from, b) anticipating which events are most likely to occur, c) identifying coverage value amounts, and d) understanding your home’s vulnerabilities. To do these things, 1) review the fine print of your policy closely, 2) access local statistics, 3) properly valuate and record your home’s worth in addition to the property inside your home and 4) have your home inspected. When dealing with inspectors, assessors and insurers ask them questions if you are unsure about anything.

Installing cost effective measures such as sufficient fire alarms, carbon monoxide detectors, fire extinguishers, theft protection devices and other items that may reduce risk of damage or loss of property may lower the premium of your homeowners insurance allowing you to either increase your coverage amount or save money in the long term. If your home is under construction, insure the building materials, determine if contractors are insured from accidents on the job, and if you require additional insurance relating to the building of the home.


Assessing if your homeowners insurance provides you with adequate coverage involves a) your own tolerance for risk, b) valid market valuation of your property, c) risk assessment, and d) required insurance by mortgage lenders and/or Government. The information in this article is a discussion of the things you may want to think about when assessing if your homeowners insurance provides adequate coverage.

By reviewing this information you may attain an improved understanding of the dynamics of homeowners insurance if you are not already aware of these things or if your insurer has not informed you about the potential hazards, pitfalls or shortcomings of the homeowners insurance policy itself.