Tuesday, 14 May 2013

How Much Coverage You Need For Home Insurance ?

                   Your home insurance should be a straightforward matter of getting sufficient coverage to rebuild your house and replace the contents in the event of a total loss. And you also want to protect
yourself from such incident if someone gets hurt on your property and sues you for a complete treatment expense. But still how much is enough ? And that's not an easy question .
                           It was used to be said that you only needed to buy enough insurance to cover 80% of the cost of rebuilding your home, since it was unlikely that a house would be completely destroyed. But few disasters of 90s, disproved this wisdom. So, your best bet is to buy insurance to cover 100% of rebuilding.
            Just sit down on your couch and think about it and I am sure you can come up with a rough estimate for how much coverage you will require. Even you can ask your builder or agent for local construction cost per square foot for the kind of home you have. And if you have central air, Jacuzzi or any other expensive fittings then add on how much it would cost to replace them.
                       And once you reached at a approximate figure, there is another decision waiting for you. Which is, how do you want to be compensated in the event of any kind of loss to your home? In this you have two choices -
1) Cash value - It is the cheaper insurance policy. It pays the amount for what the destroyed property was worth at the time of destruction, and depreciation is included in it.
2) Replacement cost - It is the expensive insurance policy. It covers what it would take to rebuild your home and with similar quality material. But this policy has a price cap of 20% above face value.
            There is an important thing you should keep in mind that is, you will need to keep your insurance company informed of any additions or improvements you make to your home over the time so you won't be stuck with insufficient coverage.

If Needed Buy Extra Coverage :- 
                            It may be possible that you may need an additional coverage to protect against expensive artwork, jewelry and antique or against lawsuits.

   1) Be Sure Your Belongings Are Covered - 
                                            If you are a collector of more valuables, then you should increase the personal property protection to make sure it is enough to cover your jewelry and other expensive belongings. Assessment can help determine the value of your possessions so that you can know how much insurance to buy and so you can have proof of what the items cost.  

2) Expand Your Liability Coverage - 
                             Most standard insurance plans cover either $100,000 or $ 300,000 of liability coverage, which also pays for lawsuits against you, out of your home. You can enhance that liability coverage to $ 1 million through an umbrella liability policy, which costs about $ 150 more a year.

3) Get Government help - 
                         If you live in an area that is prone to flooding, look into purchasing flood insurance through the federal government's National Flood Insurance Program, which is managed by the FEMA. 

           Also, it sounds obvious, but make sure that you read all the small print before you sign any contracts. After disaster strikes, you don't want to be surprised to find out that your this and that was not covered.

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