Simply stated, to calculate the amount you need to properly insure your home, you must first determine its replacement cost – what it would cost you to rebuild your home from the ground up at today’s prices for materials and labor. We can help you do this by working with you to complete a residential replacement “costimator”.
Be Sure You Carry Enough
If you insure your home for less than 80% of what it will cost you to replace it, you won’t collect full cost of your repairs in case your home is partially damaged; you will collect only the “actual cash value”, which is replacement cost less depreciation.
But Not Too Much
If you purchased your home three or four years ago and you insured it for the price you paid for it, you could be carrying too much insurance – more than you could actually collect – as the price you paid or the market value, also included the land.
Your bank requires you to carry only enough insurance to cover the amount of the mortgage or the replacement cost of your home – whichever is less.
What Then Is The Proper Coverage For Your Home
Insure for 100% of today’s replacement cost and if your home is eligible, as GUARANTEED REPLACEMENT or “No-limit” endorsement. With this endorsement, your Homeowners policy will pay for the full amount to rebuild your home in the same location if it’s totally destroyed even if the cost exceeds your policy limit.
