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The Importance of Having the Right Amount of Home Insurance

January 21, 2021

As a homeowner, home insurance is a necessity. But a lot of homeowners may wonder how much home insurance they actually need.

 

A good rule of thumb is the 80% rule for home insurance. This 80% rule is a standard for most insurance companies and follows the rule that the insurer will cover the cost of damage to your home or property if you have purchased insurance coverage of at least 80% of your home’s total replacement value. This amount should be able to rebuild your home, replace your belongings, cover injuries or damages that happened on your property, and reimburse your living expenses while you cannot live in your home.

 

This is very important to understand, as if you have purchased less than 80% there is a chance the insurance company will only reimburse you a proportionate amount of the required minimum coverage. This amount may not be enough to rebuild your home the same, cover expenses while you cannot live at home, or be able to replace all of your belongings.

 

According to a report from CoreLogic, a housing data firm, about 60% of all homes in the United States are underinsured by an average of 20%. This may be because of inflation, as it can cause the replacement value of your home to increase without you knowing it. It may also be due to capital improvement, which is the addition of a permanent structural change or the restoration of an aspect of a property that will increase the property’s overall value. Therefore, it is always important to review your insurance policies and replacement values from time to time to make sure you have the correct amount of coverage.

 

Although 80% might sound like a lot, the good news is that you can fine-tune your home insurance to make sure you have the right type and right amount of coverage.

 

Looking to insure your home? Homeowners coverage from Small & Son Inc. Insurance provides options for everything from a wide-open Craftsman to a split-level ranch and every style in between. Whether you need to insure your primary residence, single family home, condo, rental property or vacation home you can rely on our experience to get you the proper homeowner coverage at the most competitive price. Call us today at (570) 421-0111 to contact our friendly and professional insurance agents for a personal quotation!

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