It is never easy to judge how much insurance you need to have on your home to keep your loved ones financially protected. But the actual process of picking the correct amount is much simpler than it might seem if you analyze the notion of insurance and apply its true meaning to your specific situation.
Considering the Objective of Home Insurance
In most cases, the aim of the homeowner is to make sure that they have adequate insurance coverage to compensate them should their home be totaled during an insurable incident. Being made whole is always preferable to being given partial value of your home—which would mean that you must either supplement your insurance benefits in order to re-establish your life or that you must lower your cost of living.
In addition to determining the value of your home it’s likely that you want to insure the value of your belongings as well so that you are not required to liquidate retirement and other assets in order to purchase furniture, clothing and other personal items.
Finally, covering antiques, artwork and other treasures secures your investment in these pieces. While an emotional attachment to an article can never be fully reimbursed, the physical value of the object and the money you’ve put into it, can.
What Goes Into Being Made “Whole”
You might believe that being made whole by your insurance company means that you will get the sale value of your home so you can reconstruct or purchase another, similar home. But there are actually a lot of other reasons involved in being made whole including:
Debris elimination: If the insurable incident left debris around your property, this must be cleared before renovations can begin. This is an additional fee that might surpass the value of your home but is essential to begin the process that will make you whole.
Consideration of building codes: Over the years, as building materials change, the required codes for building are upgraded as well. The economical windows that might once have been adequate may not be wind resistant enough for your local building codes, so reconstructing your home may carry many costs that surpass the actual value of your former dwelling.
Catastrophe considerations: If a natural disaster is the cause of your insurable incident, then it’s improbable that yours is the only home affected. That means that construction firms will be inundated and may increase prices to keep up with demand. This increase may even exceed the limits on your policy. When determining the replacement cost of your home, you will want to keep this in mind.
Determining the correct amount for you
All of this information may do nothing more than make you worried that you have inadequate Georgia home insurance coverage. But being intimidated may lead to inaction, which is the most treacherous step you can take. Instead, create a plan of action for determining a reasonable amount of home insurance for your family.
- Start by getting a real estate assessment. While this might be pricey, it can give you an excellent idea of the value of your home and the limits you should choose.
- Work with your agent: Your insurance agent can give you an idea of the insurance company’s replacement cost estimates for your home. A program by Marshall & Swift automatically computes data including location and building costs and determines your likely replacement costs. This information could adjust once a year so it’s vital to ask your agent for updates when you renew your policy.
- Survey homebuilders: No one understands current prices for home construction quite like those companies that are actually doing it. Contact a local home builder and explain that you want an estimate so you can get the proper insurance coverage. They may charge for the estimate.
Remember, securing your family’s largest and most significant investment is your main goal when purchasing insurance. While you may be satisfying the requirements of a lender by taking out a policy, that should not be your only motivation for doing so. Making certain that you and your loved ones will have some financial recourse should you encounter an insurable event should be your top priority.
For more information about home insurance, contact Peachstate Insurance at 877-997-2478 today!