The Proper Amount of Home Insurance

It is estimated that around 60% of American homes are under-insured by an average of 22% and don’t carry the proper amount of insurance that is needed.  Your home is most likely your single largest investment, so insuring it sufficiently is a vital piece of maintaining your financial independence. 

You should have a proper amount of home insurance, that of which is adequate enough, to cover the cost of rebuilding your home in the event it is completely ruined by a fire, tornado, hurricane, or other insured disaster.  If you’re unsure how much home insurance is the proper amount of coverage, that depends upon what it would take to restore your home based on current construction costs.  Please refrain, though, from including the land value and considering the price you paid for your home or its appraised value; they do not affect anything.

There are other considerations to take into account when determining the amount to insure your home for, such as:

  • Fees for an architect or other design expert to approximate costs and create plans to be followed by the contractor
  • Rapid inflation in the cost of building materials and labor following a major catastrophe that affects a number of homes in the same region
  • Local building codes that require replacement with additional features or more expensive materials
  • If you are given an amount of what it would take to restore your home, in the end it could end up higher than originally predicted. If possible, it might help to take that into consideration.

There are a number of methods used to estimate the replacement cost of a home.  Some of the factors insurance companies use are:

  • Construction materials
  • Type of foundation
  • Attached or detached garages
  • Square footage
  • Location of the home
  • Fireplace
  • Upgrades
  • Number of rooms and baths

In the end it is your responsibility to establish the value of your property and choose the amount of insurance for your policy.  We can assist with that decision and make it clear what you can do to avoid an unpleasant shock after a loss. Call us today at 305-270-2100 to see if your home insurance policy is up to par.

At Filer Insurance, Inc., we have been providing Home, Auto and Business Insurance in Miami and South Florida since 1919.  We would very much like to have you as one of our customers.  Please give us call or come by our office for a free quote on your insurance.

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