As a California Resident, How Much Should I Insure My Home For?

How Much Should I Insure My House For?  Most Likely, For More Than You Think

At United Agencies, we are regularly asked this question, “how much insurance do I really need to have on my home?”  The answer, of course, varies for each person and situation, especially as a resident of California.  We address many of those questions in this article:

Home Rebuilding Costs vs. Replacement Value Costs

This can be very different from the estimated market value or actual purchase price. In many cases, it can actually cost more to rebuild the home you own than to buy a new one!

UA understands the home insurance needs of our customers. We’ll work with you to estimate the replacement cost for your home and to adjust your policy limits from time to time as needed.  When working with us, we will ask for updated information about your home and contents. If your dwelling limit accurately reflects your home’s true replacement cost, some companies will pay more than the limit if a covered loss is greater than the limit on your policy.

Evaluate & Examine Everything

Once a review of your home and possessions indicates you are properly insured, it’s a good idea to examine reexamine your coverage and limits regularly, especially whenever you make additions or improvements. United Agencies can help evaluate your insurance needs when need assistance.

Here are some steps you can take to reduce the danger of being seriously underinsured:

• Ask Us:  Ask us to show you how everything should be properly calculated, which will ensure nothing is overlooked. United Agencies is happy to help with all of your evaluation needs.
• Read Up:  Make sure to read your policy. Certain property, such as jewelry, and certain perils like earthquake or flood, is better insured separately. Knowing what is covered and for how much will help you insure properly. If there is anything in your policy you don’t understand, contact us for assistance. We are always happy to help!
• Review It All:  At each annual renewal of your policy, you receive a new Policy Declarations page showing limits of coverage and optional coverage. Review this information. If you do any significant remodeling - adding a family room, extra bedroom or bathroom, adding a pool to your home, etc., tell us about these changes so your coverage limits can be adjusted to cover the improvement.
• Consider Everything:  Carefully consider whether your policy provides all the protection you need. Does it provide coverage for extra costs resulting from building code changes? Does it automatically increase coverage limits annually to keep pace with inflation? Does it provide additional funds if the cost of rebuilding your home exceeds the policy limits?  Let UA help with you with these important issues.

Make Sure You Know:

• Will your insurance company stand behind agreed upon repairs after a claim? Some companies are willing to put this guarantee in writing. Let our United agents help guide you every step of the way.
• Does your policy include replacement cost coverage for contents inside your home? (clothing, furniture, appliances, and other personal property) If not, you can add it by endorsement. The cost is small, the protection valuable. Replacement Cost Coverage pays for losses to your possessions at the cost of brand new items. Without this option, a covered loss to your personal possessions would be depreciated by their age and condition, reducing the size of your claim settlement.

Additionally, if you have an art collection, antique furniture, jewelry, high end sports equipment, or other valuable possessions, talk to your agent about supplemental coverage, such as fine arts or scheduled property endorsements, to adequately protect your investment in these items. The cost is modest for the extra protection, and often the deductible is waived.

Consider whether you should have more coverage for personal property (contents) than your policy provides. Personal property coverage is usually 70% of the coverage limit for the structure. Your limit may be lower than 70%. Supplemental protection is available for a small additional premium.

Another important thing to do is to “Inventory” your home regularly!  This means prepare an inventory of personal property items, update it periodically, and keep it in a safe place outside your home, such as a safe deposit box at your bank. It will save you hours of time trying to list everything damaged or destroyed if you need to make a claim. It will also help ensure you don’t forget some items. At United, we are skilled in assisting you with this important task.

At UA, we can advise you on ways to simplify the job of preparing a personal property inventory such as videotaping each room with descriptive information on the sound track.

Personal Liability

Besides making sure you have enough protection to cover possible damage to your own home and contents, you should also evaluate your exposure to liability risks. These result from damage to the property of another, or injury to a person who is not a member of your household, for which you can be held responsible.

In recent years, it has become more common for homeowners to be sued for injuries or damages to others, even when there is no evidence of negligence by the homeowner. The reality today is if you have any appreciable assets, your risk of being sued is higher. Even if you ultimately prevail in court, your legal fees and the months or years of worry and uncertainty can be a terrible burden on you and your family.

The Personal Liability coverage provided by your Homeowners Policy usually provides a limit of $100,000 or $300,000. We recommend increasing this protection with a personal umbrella policy. Not only will it increase your personal liability, but also your auto liability. Limits are available from $1 million to $10 million and beyond. The cost of this coverage is usually very reasonable.

Keep in mind that California can require certain minimum levels of coverage. The right coverage for you is unique.  Be sure to talk to United Agencies rep today to find out how to get the best price and value on home insurance for you.

Final Tip: ➡ Don’t just cancel your Homeowners Insurance if/when you pay off your home! 

Regardless of mortgage status, your Homeowners insurance protects your investment in your home. Standard homeowners policies provide coverage for disasters such as damage due to fire, lightning, hail, explosions and theft. They do not cover floods, earthquakes or damage caused by lack of routine maintenance. If you are uncertain as to what type of coverage you should carry, consult United Agencies for assistance. Our agents can help structure the right coverage for your needs.