A survey from CoreLogic found, on average, 20 percent of homes in the United States lack enough home insurance. Home insurance provides financial protection to you when accidental and unpreventable incidents occur. How much do you need?
It can be one of the most important tools you have. It helps protect your financial health. It also works to minimize risks you face every day. Do you have enough?
How Much Insurance Is Enough?
It can be hard to determine this number easily. Many factors play a role in it. Most importantly, you want the following to occur.
- You want to be sure you can rebuild your home if a fire or another event leads to unrepairable damage.
- You want to have enough coverage to cover all of your valuables in your home.
- You want ample coverage to minimize liability risks.
- You want to be sure your home insurance can provide you with legal defense if you face a lawsuit.
- You also need the policy to protect all of your high-worth belongings.
Does your home insurance meet these goals? If not, it may be time to look for ways to extend your coverage.
Key Areas of Common Loss
Consumer Reports provides some insight into the most common areas of loss from the CoreLogic report. These are areas where many homeowners lack enough coverage.
- The cost of construction is rising. When material and labor are higher, it costs more to rebuild a home. Update your home insurance to match this higher cost.
- Remodeling or updating your home may add value to it. For example, you may add another bedroom. You may expand the first floor. This adds value to the home. It needs additional coverage.
- You lack enough coverage for floods or earthquakes. Hurricane risks are also increasing. A typical policy does not provide this type of coverage. You may need a specific rider to provide this protection,
Determine what steps are right for you. Work with your home insurance agent to go through all of the risks your home needs ample coverage for. This includes weather events. It also includes risks related to the way you use your home. If you have a workshop onsite or run a home business, you may need additional coverage.
Being underinsured often occurs because property owners do not review their policy on an annual basis. Doing so just takes a minute. Update your home insurance policy to make sure you have ample coverage.
Also Read: Think About Insurance Premiums When Looking at Homes for Sale