This too, is a very complicated question to answer, and that’s because the answer isn’t as straightforward as you may think. The truth is, much like cost, there are several factors that come into play when trying to determine the exact amount of coverage needed. What we can say is that a typical homeowners policy consists of coverage for the replacement value of your home, your personal belongings and to protect your personal liability – so let’s explore these three things a bit further.
- When it comes to the structure of your home, it is important that you insure your home for its full replacement value, or the full cost to rebuild your home in the event of a total loss. It is imperative that you let your insurance agent know about any and all special finishes or features, like crown molding, hardwood floors and granite countertops, because they will need to be factored into your overall replacement value.
- When it comes to personal belongings, most insurance policies cover your things at 50 to 70 percent of your home’s value. However, at Morse, we strongly recommend that our clients complete a home inventory, so we can accurately determine the appropriate replacement cost of each item and, from there, the necessary coverage. For more expensive items like an engagement ring, family heirloom or a commissioned piece of art, you may want to consider purchasing additional coverage, like a special jewelry and fine arts rider, to reduce your financial exposure.
- Typical liability coverage included in a standard homeowners insurance policy is approximately $100,000 to $300,000. However, if you think you might be at risk for a lawsuit, you may want to seriously consider bumping this coverage to $300,000 or even $500,000.
For additional peace of mind, you could also consider purchasing a separate umbrella policy, which can add an additional $1 million or more in available coverage. This additional policy is not only affordable, it’s a great way to increase your overall liability protection, and is strongly recommended by Morse if you own a pet, have a pool, trampoline, teenage driver, or allow a nanny or caregiver to drive your personal vehicles.