How Much Home Insurance is Enough?

How Much Home Insurance is Enough?

APIA Insurance understands the home insurance needs of our customers in Alaska, Nevada, Nebraska, and Georgia. We’ll work with you to estimate the replacement cost for your home and to adjust your policy limits as needed. Even if you aren’t a current customer of APIA Insurance, we recommend that you read on to gain useful information regarding home insurance coverage. Or, if you just want a homeowners quote, we can help you with that, too.

So, the burning question is: How much home insurance is right for you? 

Here are some terms and tips that every current and future homeowner should know when it comes to insuring your home investment:


Replacement Cost/Replacement Value

The cost to rebuild your home is its replacement value. This can be very different from the estimated market value or actual purchase price. In most cases, it costs more to rebuild the home you own than to buy a new one.

Dwelling Insurance

Sometimes referred to as your dwelling limit, this is the part of your homeowners insurance policy that helps to pay for the rebuilding or the repair of the physical structure of your home if it's damaged by a covered hazard.

Be Honest and Accurate When Providing Information to Your Agent

It is critical that you provide your agent with accurate, updated information about your home and its contents. If your dwelling limit accurately reflects your home’s true replacement cost, some companies will pay more than the limit if a covered loss is greater than the limit on your policy.

Conduct Periodic Re-examinations of Coverage

Once a review of your home and possessions indicates you are properly insured, it’s a good idea to re-examine your coverages and limits from time to time, especially whenever you make additions or improvements. APIA Insurance can help you re-evaluate your insurance needs, just give us a call at 1-800-890-5563 to speak with one of our agents.

Avoid Becoming an Underinsured Homeowner

Here are some steps you can take to reduce the danger of being seriously underinsured:

  1. Contact your insurance agency. If you have questions or concerns about the limits in your policy, ask your agent to show you how those amounts were calculated. This will also give you an opportunity to make them aware of any overlooked information.
  2. Read your policy. Certain property, such as jewelry, and certain perils, such as earthquake or flood, is better insured separately. Knowing what is covered and for how much will help you insure properly. If there is anything in your policy you don’t understand, contact your agency and have them look over your policy to provide an explanation.
  3. Review. At each annual renewal of your policy, you receive a new Policy Declarations page showing limits of coverage and optional coverages. Review this information. If you do any significant remodeling or add a family room, extra bedroom or bathroom, etc., tell your agent about these changes so your coverage limits can be adjusted to cover the improvement.
  4. Consider carefully whether your policy provides all the protection you need. Does it provide coverage for extra costs resulting from building code changes? Does it automatically increase coverage limits annually to keep pace with inflation? Does it provide additional funds if the cost of rebuilding your home exceeds the policy limits?
  5. Does your policy include replacement cost coverage for contents (clothing, furniture, appliances, and other personal property inside your home)? If not, you can add it by endorsement. The cost is small, the protection valuable. Replacement Cost Coverage pays for losses to your possessions at the cost of brand new items. Without this option, a covered loss to your personal possessions would be depreciated by their age and condition, reducing the size of your claim settlement.

Will your insurance company stand behind agreed upon repairs after a claim? Some companies are willing to put this guarantee in writing. Ask your agent!

Homeowners Coverage for Valuable Possessions

If you have an art collection, antique furniture, jewelry, or other valuable possessions, talk to your agent about supplemental coverages, such as fine arts or scheduled property endorsements, to adequately protect your investment in these items. The cost is modest for the extra protection, and often the deductible is waived.

Personal Property Inventory

Consider whether you should have more coverage for personal property (contents) than your policy provides. Personal property coverage is usually about 70% of the coverage limit for the structure. Your limit may be lower than 70%. Supplemental protection is available for a small additional premium.
Inventory your home. Prepare an inventory of personal property items, update it periodically, and keep it in a safe place outside your home, such as a safe deposit box at your bank. It will save you hours of time trying to list everything damaged or destroyed if you need to make a claim. It will also help ensure you don’t forget some items. APIA Insurance can advise you on ways to simplify the job of preparing a personal property inventory such as videotaping each room with descriptive information on the sound track.

Personal Liability

Besides making sure you have enough protection to cover possible damage to your own home and contents, you should also evaluate your exposure to liability risks. These result from damage to the property of another, or injury to a person, not a member of your household, for which you can be responsible.

In recent years it’s become common for homeowners to be sued for injuries or damages to others, even when there is no evidence of negligence by the homeowner. The reality today is if you have any appreciable assets, you are exposed to the risk of being sued. Even if you ultimately prevail in court, your legal fees and the months or years of worry and uncertainty can be a terrible burden on you and your family.

The Personal Liability coverage provided by your Homeowners Policy usually provides a limit of $100,000 or $300,000. We recommend increasing this protection with a personal umbrella policy. Not only will it increase your personal liability, but also your auto liability. Limits are available from $1 million to $10 million and beyond. The cost of this coverage is usually very reasonable.

Keep in mind that the minimum levels of coverage vary depending on what state you live in. The right coverage for you is unique – talk to APIA Insurance today to find out how to get the best price and value on home insurance for you.

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