Homeowner’s insurance is a ‘must have’ in these days of climate change, recession and uncertainty. If you can insure the roof over your head, at least you have peace of mind. There are three parts to a homeowner’s insurance policy: the structure of the house and outbuildings, your personal belongings and the libel liability. Make sure you are covered for it all.
To value your house and outbuildings, you have to estimate how much it would cost you to rebuild it from scratch. On a basic level, you can see what it costs to build one of the spec builder’s houses of similar square footage, but you also need to consider things like driveways, landscaping, window furnishings and of course, outbuildings. You may also want to up the price if you have a certain standard of quality finishes.
It’s difficult to know exactly what it would cost to replace all your personal belongings if your house was ever to burn down, be destroyed by an earthquake or tornado or even water damaged by a flood or wild storm. And to be honest, most people would never replace every single thing that they had in the house (you didn’t really like that Billy Ray Cyrus CD, did you?). Of course, you would want sympathy damage for your lost photos and sentimental heirlooms, but no money could ever bring them back. Most homeowner’s insurance companies suggest that you base your contents part of the quote on 50-70% of the cost to replace the structure of the house. If this figure sounds reasonable, then use it. If not, as you have priceless jewelry, collectable artwork or antiques, you may want to insure them separately. If you feel that both 50% or 70% is too much for your prized possessions, then you should base your homeowner’s insurance quote on itemizing each room to come up with your total figure. Don’t forget to ensure that your homeowner’s insurance policy covers outdoor items including bicycles, lawn mowers, umbrellas or sail shades, barbecues, outdoor furniture and even clothes lines.
Liability Protection is a fairly standard addition to any homeowner’s insurance policy. It covers you for anyone or anything in your household inflicting bodily harm on another person or property if you ruin it (but not destroy it) anywhere in the world. Most policies cover $100,000 worth of costs to cover your legal fees, but experts suggest you should increase it to $300,000 and you may even want to increase it to $1 million if you ever feel that you want to be covered for libel or slander.
The best advice is to get a personalized homeowner’s insurance quote from a reputable insurance agent or broker before your luck runs out.