How Much Home Insurance Do You Need?

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house__colonial_2How How Much Insurance is Enough?

House are usually  insured for their full replacement value.   This means that your insurance agent calculates the cost of rebuilding the exact same home at today’s construction prices in order to determine replacement value. To do this, he or she will measure the square footage of your building and take into consideration the materials used and the various features such as a fireplace, hardwood floors, full basement, and number of bathrooms. If you have some unusual and/or expensive, such as a luxury stove, imported tiles, or customized paneling you should tell your agent, so they can factor these features into the value of your building. It is important to notify your agent if you build an addition or make any substantial improvements to your home so that your improvements are completely covered by your insurance policy.

Premiums are calculated based on a home’s value and, thus, some homeowners, particularly if they have already paid off their mortgage,  may prefer to insure their house  for less  than the cost of a total rebuild, reasoning that  it is highly unlikely they will suffer a complete loss of property. According to insurance regulations, a home must be insured for at least 80 percent of its value in order for a policy to fully cover the loss.

One way to lower your premium is to raise your deductible. The deductible is your out-of-pocket expense, which you pay off the top when you make a claim. Deductibles can range from $100 up to $5,000. Insurance companies know that the larger the amount it that you are committed to paying yourself before making a claim, the less likely it is for you to make a claim at all. Thus, the premium on a larger deductible is much lower than a small deductible. Visit to receive a free homeowner’s quote or call our office at 4140-571-1771- or 410-956-1111 to speak with an agent.

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