How Much Is Homeowners Insurance?

Homeowners insurance isn’t a one-size-fits-all solution. To secure optimal protection for your needs, it’s important to tailor your insurance coverage. A standard policy typically includes six types of coverage:

Dwelling

Other structures

Loss of use

Personal liability

Medical payments

Coverage for personal property

However, these coverages can be adjusted to fit your unique situation.

For example, if you have valuable belongings, you may need additional personal property coverage. We’ll discuss further how to customize your coverage.

Dwelling Coverage Considerations

Dwelling coverage pays to rebuild or repair your home if it’s damaged by a covered peril. The ideal coverage should match your home’s replacement cost, which is calculated based on rebuilding costs, not the market price. You can estimate the required dwelling coverage limit by multiplying your home’s square footage by local building costs per square foot.

To protect against unexpected increases in construction costs, consider adding an inflation guard clause to your policy or opting for an extended replacement cost coverage endorsement.

Personal Property Protection

Personal property coverage protects the items within your home, including:

Furniture

Clothing

Electronics

Appliances

When considering how much coverage you need, it’s important to note that the coverage limits typically range from 50% to 70% of the dwelling coverage. However, your belongings are usually covered at actual cash value, which deducts depreciation from the cost of repairing or replacing property.

If you want to ensure full coverage for your items without depreciation, consider opting for replacement cost coverage. And if you have high-value possessions, consider purchasing a special personal property floater or an endorsement to insure these items beyond standard policy limits.

Liability Coverage Insights

Liability coverage is designed to protect you against legal responsibility for causing injury or property damage. While homeowners insurance policies typically include at least $100,000 in liability coverage, it’s recommended to increase this limit to at least $300,000 to protect your assets and potential future earnings from lawsuits.

If you have greater assets or a higher risk of being sued, an umbrella policy offers additional coverage over standard policy limits, kicking in after those limits are reached.