You Don’t Have Enough Homeowners Insurance – Probably.

Tuesday, March 27, 2018

Your home is one of your largest assets. It is likely the biggest asset you own. While it is important to carry the proper insurance to help protect your assets, properly insuring your home is much more critical.


For you and your family, your home is more than just a mere asset. It is a place where memories are made and experiences are shared. It is a place providing shelter and safety to those you love. When purchasing homeowners insurance, you are insuring more than just a house, you are insuring a home and everything it means to you and your family.


Unfortunately, nearly two thirds of homeowners do not carry enough homeowners insurance. The odds are, you may be one of them. There are a variety of reasons why homeowners fall short.


Cost of Rebuilding

When determining the amount of building coverage required to repair or replace your home, there are a few important considerations:

  • Evaluate the cost to repair or rebuild at least every two years.
  • Include the cost of additional structures such as sheds or barns.
  • Include the cost of any features and upgrades into the cost to rebuild.
  • Do not use market value or mortgage balance as a determination needed limits.


Determining the cost to repair or replace your home relies on a fairly simple formula. Using free online cost estimators, obtain the local building cost per square foot and multiply it by your home’s square footage. The average cost per square foot can be adjusted for overall improvements made to the home including, upgrades to countertops, cabinets, and flooring.


Value of Personal Belongings

Quick, how many pairs of socks do you and your family own? It may seem like a silly question, but over 40% of homeowners either don’t have or don’t know if they have enough coverage to replace their personal belongings.


It is recommended to insure belongings using replacement cost instead of actual cash value. Actual cash value only provides payment after subtracting depreciation. This means if you happen to lose a three-year-old computer due to fire, you’ll likely receive pennies on the dollar. However, replacement cost coverage would provide you with enough to replace the computer with today’s equivalent.


Here’s how to determine the coverage you may need:

  • Take a video recording of your belongings.
  • List your belonging using an online inventory tool or pen and paper.
  • Assign an estimated value to each of your items (doesn’t have to be exact).
  • Store your video and inventory in a safe place.
  • Review and update annually.


Surprisingly, most homeowners underestimate how much it would cost to replace all their personal belongings after a catastrophe. Following the four steps above, you might be just as surprised. Those socks do indeed add up!


When documenting your inventory, consider there are usually limits to the amount of coverage provided for home-based office equipment, jewelry, silverware, furs, fine art, and financial instruments.


Additional Living Expenses

Determining the limits of building and belongings coverage will help in providing coverage for the visible exposures you and your family face. One of the invisible exposures, which need to be addressed is additional living expense.


Additional living expense coverage, or ALE, covers expenses incurred if your home is uninhabitable after suffering significant damage. This includes the cost of obtaining shelter elsewhere and can include food and limited daily living expenses.


If you operate a home-based business or have a business with a home office, coverage for lost income may not be provided under your homeowners policy. Instead, consider requesting if coverage is available as an endorsement or seek a separate small business policy.


Liability Exposures

The other invisible exposures homeowners face are potential lawsuits resulting from accidents in your home. Obtaining adequate liability limits will cover the costs of defense, medical bills for other individuals, and other damages you may be found liable for up to the limit purchased.


Lawsuits against homeowners come in all shapes and sizes. If you think your property doesn’t pose a risk to others, consider the following common types of liability claims:

  • Dog bites
  • Falling tree
  • Slip and fall
  • Playset injuries
  • Intoxicated guest
  • Kitchen accidents
  • Swimming pool injuries


Standard insurance policies provide $100,000 per incident with a $300,000 annual maximum. But lawsuits quickly and often exceed these limits. Consider higher limits or purchasing an umbrella policy, which provides coverage for the home and for other exposures such as automobile liability.



Understanding what to consider when purchasing homeowners insurance will put you on a path that helps protect your most important asset, your home. Have some confidence knowing your home, personal property, and your bank account are insured.


To learn more about homeowners insurance, contact our team at or call (877) 739-9367. Our licensed insurance agents will be happy to answer any questions you have.