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Choosing Right Coverage Limits For Home Insurance

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Choosing Right Coverage Limits For Home Insurance

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It’s exciting to own a home. Especially if you’ve rented for years, you finally have the chance to make your place special. With free reign, you can turn an ordinary house into your dream home. However, being a homeowner comes with a lot of responsibility. Along with taking care of repairs and maintenance, you need to have the best homeowners insurance.
If you feel a little overwhelmed by this, you’re not alone. While everyone knows they need the best homeowners insurance, it’s not hard to feel confused about the right coverage. That includes specific protection options, add-ons, and of course, limits.
When you think about it, your home is your most valuable asset. This is why selecting the best policy is so critical. Remember, homeowners insurance covers the dwelling, as well as your belongings. If you have a workshop, barn, detached garage, or other outbuildings, you can include those on the policy. The same goes if you want additional coverage for expensive artwork, jewelry, and firearms.
A Unique Decision
Every homeowner and home is unique. While a policy might work best in one scenario, it might not suffice in another. This is why it’s essential to work with a trusted insurer. Together, you and the agent can go over all the different options so that you end up with the best homeowners insurance at the lowest premiums possible.
When it comes to coverage limits, you want to focus on the following three aspects:

  1. The cost to rebuild the house
  2. The value of your belongings
  3. The value of all your combined assets

Coming up with information for these will determine the coverage limits you need. Now, along with the add-ons already mentioned, those limits could change if you buy a house in an area prone to natural disasters.
For instance, if the property is in a location known for flooding or tornadoes, the agent can specify this as well. As a result, you’d end up with higher coverage limits. This would also affect your premiums, but considering the alternative of not having enough protection, the additional expense is worth it.
Rebuilding Your Home
In the event of a fire or some kind of natural disaster, you want coverage that allows you to completely rebuild your house. Unfortunately, to satisfy the mandate of having homeowners insurance, some people go with the lowest possible coverage limits, which wouldn’t pay for a full rebuild.
The agent determines the amount of coverage to rebuild based on the information you provided at the time you secured the policy. However, after owning the property for a couple of years, you should have an appraiser give you an updated cost to rebuild. Then, you’d adjust your insurance accordingly.
As part of the appraisal, the appraiser will look at the current market value of your home and also consider other factors that could impact the cost to rebuild. For instance, if you’ve made updates or done renovations since buying the house, you’ll need higher coverage. Even having a new roof installed would affect the policy coverage.
The Bottom Line
For coverage, you want to go with the best homeowners insurance you can afford. However, any changes to the house would warrant an appraisal to make sure you have sufficient coverage limits. Also, make sure you have protection for anything not covered in the basic policy, including outbuildings, artwork, jewelry, and so on.
Just because you buy the best homeowners insurance at the time you purchase a home doesn’t mean that the same policy will offer the coverage limits that you’ll need in the future. So, meet with your insurer occasionally to stay up to date so that you always have the optimal protection.


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