How to Decide How Much Home Insurance You Need
Buying insurance – the right amount of insurance – can be tricky. You don’t want to buy too much insurance because you’re wasting money on premiums for something you don’t need. You also don’t want to underestimate your insurance needs because if you do have an emergency you won’t be covered and that can be costly. This is especially important when it comes to deciding how much home insurance you need.
So how much is too much insurance? You may be asking yourself how you decide how much home insurance you need.
When getting home insurance quotes it’s a good idea to have all this information handy to ensure you get an accurate quote for the amount of coverage you need. Use the following tips to help calculate exactly how much home insurance to buy:
First calculate the livable space of your home
The bigger the home you buy, the more insurance you’ll need. That’s just a fact because the more space you have the more expensive it will be to replace it and rebuild if you have a loss due to fire or water. This is true for home owners as well as tenants.
One of the first questions an insurance company will ask is the square footage of your home. Once this basic information is established you can move forward.
Remember that your home details matter
Home insurance premiums are based on the risk of potential damage to your home and how much it would cost to rebuild the structure and replace your personal belongings. The older your home is, the more insurance you may need because the likelihood of having a mishap could be greater than a newer constructed home.
When getting quotes for home insurance be sure to have the details of your home’s construction date and materials (i.e. brick or concrete) as well as the heating source readily available. This will help you figure out how much home insurance you need, as well as get an accurate quote.
Add in the cost of all your belongings
After you’ve determined a basic home insurance coverage amount based on the size, structure, and age of your home, you can start to factor in the cost of your items inside the home. Total up all your personal belongings by category such as electronics and furniture or by room such as kitchen, bedrooms, and living room. This will help organize the claims in case you have an emergency.
It’s a good idea to keep receipts from purchases in case you do need to file a claim. Having the date of purchase and cost of items is very helpful and can make the process a lot simpler. You can also keep an inventory of all your belongings by taking a video of your living space; just make sure you keep it up to date.
Decide if you need perils insurance
Perils insurance allows you to add on additional clauses into your insurance policy to cover specific items such as jewelry, art, furs and other valuables. This comes at an additional cost and is usually only needed if the items are worth significant value. Otherwise, the value and replacement cost can be included in your standard insurance policy.
Reviewing your insurance policy every year upon renewal – or during a life milestone – helps insure the value of your items stays up to date and makes sure both your home and your belongings are always covered, just in case.