How Much Homeowner's Insurance Should I Get?

How Much Homeowner's Insurance Should I Get?

September 19, 2016
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Who picked that amount of insurance for your home? Did you tell your insurance agent that number, was it the bank, or was it pulled out of a hat and plugged into your policy? Hopefully for your sake, it was derived from a conversation between you and your insurance agent. That said, if your agent is using the "pull the number out of a hat" method, then it may be time for you to consider a new agent.

A common mistake made is to simply insure your home for the same amount that you paid for the home. The trouble in doing this is that it fails to take into account the land value of your property, which is not insurable. For example.... If your 3,000 square foot home on the beach that you paid $5,000,000 for was completely destroyed in a fire, would the value of the lot diminish? The answer is no. Perhaps we may insure this home on the beach for $900,000 and once we rebuild that home with the $900,000 it will again be worth $5,000,000. By insuring the "market value" of your home, you are most likely over insuring your home and paying premium for coverage you do not need. So how do we actually calculate the replacement cost of your home? There are a few ways that we can accomplish this important task:

  • Create a Replacement Cost Estimate
  • Use an Appraisal Tool
  • Subtract land value from purchase price

How about your personal property? How much insurance should we put in place for your belongings and what settlement method should we use? To answer this question you need to consider all of your personal belongings and the total value to replace these important items. Once you arrive at the amount of personal property coverage, it is then equally important to choose whether you want replacement cost or an actual cash value settlement option.

At Galt Insurance Group we take great pride in educating all of our clients on proper coverage selections. Not only does this ensure the right amount of coverage when you need it most, but it also provides peace of mind knowing that you have taken the time thoroughly review the protection of your greatest asset. We take the time to make sure that mistakes in your current insurance policy are identified and corrected before we issue your new policy with our firm.

Call us today at 239-254-0127 to set up your one on one appointment with one of our top tier agents!