In the most basic of terms, when thinking about Homeowners insurance, homeowners should consider the following:
Property Limits + Liability Limits
Homeowners Insurance Limits
You probably spent a pretty penny on your home. Talked to endless mortgage lenders, searched high and low for the right house, negotiated prices, paid plenty of fees and costs. Now you have to insure it too!
But how do you know you have the right amount of coverage for your house?
Let’s cut through the confusion and assist you in choosing how much Homeowners insurance you want to cover your major investment, by taking into account the:
1. Value of your home:
We don’t mean what you paid for your house, or even what you could sell it for. That’s determined by the housing market and demand in your area. The “value” we’re talking about is the cost to rebuild it from the ground up, if a total loss (heaven forbid) ever happened.
When estimating this value, you should think about the:
- Age of your home – if your home is older and something happens, you may have to rebuild to modern building code standards…and that might be more expensive.
- Local construction costs – talk to local contractors, look online, or speak to your insurance agent. They’ll help give you a good idea of labor and materials costs, and help you determine how much it’d cost to rebuild a home like yours.
- Upgrades, renovations, and additions – if you’ve done some remodeling or added a sun room or something, that can up the cost to rebuild after a disaster. Make sure you take that into account, and inform your insurance company, to make sure you have that addition covered.
After you’ve crunched the numbers, talk to a Farmers agent. They can run a “replacement cost estimator” which takes a variety of variables into consideration, to help you find the coverage you want.
2. Value of your personal property
Homeowners insurance not only covers the cost to rebuild your place, it’s also there to cover the stuff you’ve got inside. So to make sure everything from your bedroom furniture to that sweet new widescreen TV is covered, you’ve got to know what it’s all worth right? And no, we don’t want you to eye ball it.
Calculate personal property value and take a legitimate "Home Inventory."
That way, you’ll know the approximate value of what you own to determine the proper amount of coverage for you in case something happens.
3. Value of your assets
Ok, so you’ve got the physical stuff covered. But what about your other assets? As a home owner, you’re responsible for everything that happens on your property. So if a neighbor comes over with a fruit basket, but slips and falls on your icy front step, they could possibly sue you and go after your savings, your business…whatever it takes to cover any judgement they obtain against you. What’s there to cover you then?
That’s when the Liability coverage of Homeowners insurance comes in. Subject to some limitations, Liability covers you when you’re legally responsible for someone else’s bodily injuries or property damage, whether or not it’s on your property.
Talk to a Farmers agent about your Liability coverage, and determine the coverage limits you want, and you’re comfortable with.
4. Value of unique, expensive, or antique items
Do you have expensive art, a rocking guitar collection, handsome grandfather clock, or beautiful jewelry? Valuable or unique things like that might not be fully covered by your standard Homeowners insurance limits.
If you've got unique or expensive things in your house, consider covering them with a specific addition (also called a Floater) to your policy.