Posted on: 15 June 2020
If your house burned down to the ground, would your homeowner's insurance plan cover the entire loss? If not, you should update your policy so that it would. How do you know if your plan is enough? How do you choose the right coverage types and amounts? If you do not know these answers, here are several tips to help you have the right amount of coverage if you ever experience a total loss of your house.
Understand the Difference Between the Two Primary Types of Coverage
A home insurance policy has two primary types of coverage. The first is structural coverage, which protects your house. The second is personal possession coverage, and this covers the things you own. You can also add additional coverage types to your policy for extra coverage. Insurance agents often call these endorsements. An endorsement adds protection for a specific thing or event.
How to Choose the Right Coverage Amount for Your House
The most crucial decision is the amount you name for your structural coverage when buying home insurance. The coverage amount for your home's structure tells you how much money your insurance company will pay if you lose your entire house. When choosing this amount, keep the following things in mind:
- The balance you owe on the house
- The amount the home is worth
- The cost to rebuild the house
These three amounts are vital when selecting home insurance coverage, but the most essential number is the cost to rebuild the house. Your insurance policy should provide enough coverage to pay for you to build the same house if you lose it.
Tips for Fully Protecting Your Personal Possessions
Next, you will choose the amount of insurance for the personal possessions you own. An effective way to do this is by using a percentage calculation. These calculations are based on a percentage of your home's total value. You can choose a standard percentage model for the coverage value, but you can also add endorsements for valuable things you own. One essential thing to do is take an inventory of all your items once a year to document your items and assets.
By following these tips, you can choose a home insurance plan that offers all the protection you need. To update your policy or to switch to a new insurance company, call an agent at the home insurance agency of your choice today.Share