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How Much Homeowners Insurance Do I Need?


Homeowners insurance is an important purchase. There are several factors that should be considered carefully before choosing a policy and provider. The coverage chosen should be adequate for the type of construction, and the potential liability to others. The policy should cover the full value of the possessions in the home, and the cost of alternate lodging should there be damage requiring extensive repairs.

How Much Homeowners Insurance?

The amount of insurance depends on a number of factors. The policy doesn't need to cover the cost of the land a home is built on, but it does need to cover the rebuilding of the home. Often, banks require mortgagees to have insurance in the amount of the mortgage on the home. However, this amount may be less than the cost of rebuilding. It is up to homeowners to ensure they are covered adequately.

Homeowners should at the very least do the math themselves, by multiplying the square footage on the home by the average construction cost per square foot of the same quality home in the area. Average construction cost can be obtained by calling the builders' association, speaking with real estate agents, or doing research online. It must be remembered the replacement cost rather than market value should ultimately be the primary consideration in determining the homes insured value.

What Is Covered?

Typically, homeowners policies cover the cost of rebuilding a home, in the event of loss due to explosions, fire, theft, hail, or lightning. Risks such as floods and earthquakes are not covered, although coverage can be obtained for them.

Other extras include extended replacement cost coverage, which protects homeowners when the cost of building materials and labor goes up after a natural disaster such as a hurricane. Additionally, Ordinance or Law coverage will help homeowners cover the cost of rebuilding to code. When rebuilding an older home that antedates current building codes, this coverage can be a godsend.

An inflation guard clause automatically adjusts the limits of a policy each time it renews. Contents coverage will provide reimbursement for personal possessions within the home, not just the structure itself. Finally, an umbrella, or excess liability, policy will provide additional coverage over and above the liability limits of a home and auto policy. For most, it is important to protect themselves with this coverage.

Choosing Coverage

Finding the right homeowners policy can sound like a daunting task. It is important to review a homeowners insurance quote from more than one insurer before deciding on anything. At Fox Insurance Agency in Beaverton, Oregon, we are an independent agency. This means we can provide you with a homeowners insurance quote from each of several nationally-recognized, highly-regarded insurance companies.

We proudly serve the Beaverton Portland, and surrounding communities throughout Oregon and Washington. Contact us today for more information. We love to help people find the right coverage for their property, and their peace of mind.

The information in this article was obtained from various sources and is not all inclusive regarding the subject matter. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.