TUESDAY, DECEMBER 27, 2011
One of the most important issues concerning homeowner’s insurance is getting the right amount of coverage. You might have a really good policy in all other aspects but an inadequate level of coverage will cause you problems if you have a claim.
 So how much do you need to insure your home for? Let’s look at the two most common types of home insurance around; for the building and for the contents.
Building Insurance
If you have a mortgage then the lender will have made sure that you took this out at the time you bought the property. The most common mistake which people make with this coverage is to assume that it needs to be for the market value of the property. This is not the case, and using this as the basis for your insurance is a big mistake.
What you need to cover your property for is the cost of completely rebuilding it in the case of it being destroyed. This figure is generally advised by a surveyor and should be on the real estate appraisal report. It doesn’t include the cost of the land the home is built on but it could still be either higher or lower than the market value.
If you carry out any major alteration such as adding an extension then it makes sense to get this figure updated by a surveyor and change your insurance accordingly.
Contents Insurance
This is the coverage for all of your possessions and on the face of it is easier to work out. However, as well as adding up the price of everything you have in the house there are some other factors to take into account.
For example, you should check whether the insurer needs separate details of any particularly valuable items such as jewelry. You should also make sure that your homeowner's policy covers you on a “new for old” basis, as this means that you get the money for buying a replacement item rather than the current value of the ruined goods. If this is the case then your calculations need to take into account the market value of the contents.
The final point to bear in mind is that of goods you take outside the home. Some policies cover this, and you might need to advise the company of the likes of laptops and expensive cell phones you use away from the property.
By Matt Reynolds - Google+
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