Homeowners insurance tips
Your lender will require you to carry Homeowners insurance, and it makes sense to insure one of your biggest, if not the biggest, physical assets. Coverage is pretty straight forward if you know what to look for.
Building: What if your house burned down? Would your coverage be enough to rebuild it? This is not what the house would sell for, but what it would take to build the same house at today’s prices. Most insurance companies have computer programs that will give a very good estimate on what it takes to rebuild your home but the final decision is always up to you. Insurance companies will usually give you extra coverage, if you insure it for what they think it should be insured for. They do this because building materials and labor can fluctuate (such as after a hurricane) so you need the coverage to expand in case that happens. Your coverage probably contains an inflation rider that will automatically help your insurance keep pace with the rising cost of building or repairing your home.
Other Structures: This will be 10% of your building coverage, unless you pay for it to be more. It covers any buildings on the property that are not attached to the home. If you have put up a nice outbuilding or have more than one unattached structure, you need to confirm that you have enough “other structures” coverage.
Personal Property: Personal property includes your clothes, TV/stereo, furniture, toys, and just about everything that would not be part of the building. How much do you need? Insurance companies automatically give homeowners between 60 and 75% (varies by company) of whatever the building is insured for to cover personal items. Ask if you can have replacement cost coverage. It is a good idea to take pictures of your personal property and keep them off-site. If you have a claim, your first responsibility is to make an inventory of what was lost, and having pictures makes that a lot easier. A video is best, and easiest.
