How Do I Buy Homeowners Insurance in 2023
Standard homeowners insurance might not cover enough to fix or replace your home and belongings. This could happen if the cost of rebuilding in your area is higher than average or if the appliances and things you have insured are very expensive. If you are in any of these situations, you may want to check your policy’s coverage limits.
Most insurance providers offer additional coverage for a fee, whether it is by increasing your coverage maximums or purchasing specific add-ons to cover your valuables. For example, a standard homeowners insurance policy may not provide enough coverage for things like valuable jewelry, artwork, or collectibles. Other things, like a swimming pool, that could pose a safety or liability risk may also need extra coverage.
Also, flood insurance isn’t usually included in standard home insurance policies. It would be considered an add-on or extra policy. Also, depending on where you live, you may not be able to get flood insurance from all insurance companies.
If your homeowners insurance company doesn’t cover floods, you may be able to get coverage through the National Flood Insurance Program (NFIP), which is run by the Federal Emergency Management Agency (FEMA). NFIP policies are offered through independent agents nationwide.
Costs and requirements can be very different depending on how dangerous your area is. On the FEMA website, there is an interactive flood map that you can use to find out how likely flooding is in your area.
How much insurance do I need for my home?
To figure out how much insurance you need, you need to know how much it would cost to rebuild your home. You should also make a list and value of your furniture, clothes, and other things.
Here are a few ways to figure out how much home insurance you need:
Figure out how much it will cost to rebuild your home and any other structures like a garage, pool, or fence. To get a rough idea of how much your home will cost, multiply the number of square feet by the cost per square foot in your area. For example, if your home is 2,200 square feet and local building costs average $80 per square foot, the cost to rebuild your home would be about $176,000. A local insurance agent, real estate agent, or appraiser might be able to help you figure out how much a house costs in your area.
Include personal items like a barbecue grill, collectibles, musical instruments, and equipment for hobbies or sports. And don’t forget things like linens, silverware, and things in the attic or garage that are out of sight. On the website of the Insurance Information Institute (III), you can also find a lot of information about making an inventory and other things related to homeowners insurance.
The better your inventory is, the more details you put in it. The III says it’s a good idea to keep track of when and where you bought expensive items because that will make it easier to figure out how much they’re worth and file a claim.
Use video to keep track of what you have. Take pictures of the things in each room of your house, and don’t forget to update your list every so often. You can also download apps that will walk you through the process and store your inventory remotely.
Think about how much it would cost to replace your things. This is the price you would pay now to replace an item, like a washing machine. It is not the price you paid when you first bought it. Replacement costs can change quickly because of inflation and other factors. Even if you bought an appliance two years ago, it might cost you a lot more to replace it now than it did when you bought it.
Actual cash value pays for the cost of replacing your home or your things, but it also takes into account how much they have lost in value.
No matter how much your home has lost value, the replacement cost value covers the cost of rebuilding it as it is now.
The purpose of the modified replacement cost value is to cover older homes. Depreciation is not taken into account when figuring out how much to pay back. But original features like stained glass, ornate plasterwork, and millwork will be replaced with modern materials instead of being brought back to their original state.
The Insurance Information Institute says that extended cost value gives you a set percentage of coverage above your policy limit, usually 20% to 25%. (III).
Guaranteed cost value doesn’t place any dollar limits on replacement costs. But you might not be able to get help to fix up your house so that it meets current building codes.
Unlike actual cash value replacement, these other types of coverage may only cover the structure of the house and not the things inside. Depending on the insurance company and policy, you may need to buy extra coverage, especially for collectible or hard-to-replace items like artwork or jewelry.
Not all homeowners insurance companies cover all areas, so check this first to narrow down your options. Also, some may not offer the standard or specialized coverage you want or need, such as hurricane insurance in a coastal area or extra coverage for collectibles or valuables.