What You Need To Cover
- The structure of your home.
- Your personal items and possessions.
- Cost of living expenses accrued while your home is being repaired, such as the additional cost of living away from your home during repair.
- Personal liability to others.
When purchasing homeowners insurance you will need to insure your home to cover the cost of rebuilding at current construction costs. Land is not included when determining how much insurance is needed to rebuild. Current construction costs may be more or less than your home was built for.
Most banks require homeowners insurance coverage that covers the amount of the mortgage, however if you will need to make sure that the coverage is enough to fully rebuild your home. Also, keep in mind homeowners insurance covers your investment, even if your home is paid off, thus make sure to keep your policy to protect your investment.
The Cost of Rebuilding Your Home
- Current construction costs in your area
- How many square feet is the home
- Exterior wall types such as brick, stone, veneer or frame
- Style of home such as Victorian, Ranch or Colonial
- How many rooms and types such as living rooms, bathroom, bedrooms
- Type of roofing materials used
- Miscellaneous structures such as sheds and shops
- Special features such as fireplaces, exterior trim and specialty windows
- Any custom built features of the home
To create an estimate of the insurance needed you can multiply the total square footage of your home by the estimated local building costs. Check with a real estate agent or a builders association for that information.
*Typical homewners policies cover disaster damage such as lightning, hail, explosions, theft and lightning and do not cover damage from earthquakes, floods or lack of regular maintenance.
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