How much should i insure my house for?
My house and land (combined purchase) cost $185,000.I have stainless steel appliances, (combined D/W, microwave, fridge, electric stove, central air and water heater. Furniture (contents) not purchased as yet and will be added later. How much should i insure my house for?
*Note -land is not to be insured* Any suggestions on what i need to do, types of coverage and flaws to look out for?
THKS for your kindness
Please take the time to sit down with a local agent who can calculate the cost to remove the debris & rebuild your home based on the square footage and local labor and building supply costs. Most agents have the software available to help you determine this as accurately as possible. If this figure is not accurate and you are underinsured at the time of a loss, you will be penalized by the same percentage that you are underinsured. Bear in mind that the figure you are quoting of $185,000 is based on market value and insurance companies use cost of construction not market value when adjusting a loss. Your cost to re-build might even end up being higher than your purchase price!
In terms of your personal property your calculation should not be based on the current “used” value but the value to “replace” or purchase these items brand new. Your personal items includes your clothing, your furniture, your small appliances, electronics & media (games, cds, dvds, software,etc), dishes, pots & pans. Valuable Items such as jewelry, fine arts & antiques, computers, fine china, silverware, etc. need to be endorsed onto the policy in order to have the appropriate coverage. Normally for personal property the HO-3 Policy form will include a percentage of 50 or 70% of what is listed as the amount of coverage on the dwelling, i.e. if the company insures the home for $200,000, the amount of coverage for Personal Property is $140,000. However, the policy does stipulate specific limitations on Valuable Items hence the need to endorse these onto the policy. Also purchase the replacement cost coverage option on the personal property and on coverage A–the building coverage.
It is very important for you to include ordinance and law coverage and sewer/water back up coverages. In addition I would have a minimum of $500,000 personal liability coverage and $5,000 medical payments coverage. To save money, please consider the following–have whoever writes your auto insurance quote this for you so that you can possibly get a multi-policy discount, take a deductible of at least $500 or $1,000, consider installing a central station burglar & fire alarm system, getting fire extinguishers, etc.
One last note–I would suggest that you do a full inventory including taking pictures, video, etc. of all your personal property and keep these records (along with receipts for big ticket items) in a safety deposit box or other secure location away from the home. If you ever have a fire or other type of major loss, you will find this information to be invaluable in submitting your claim.
Congratulations on your new home. Good Luck
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