Absolutely. First of all, if you have a mortgage, having homeowner’s insurance will almost certainly be a requirement of your lender. At the very minimum, the lender will want to be protected in case of loss.
In our opinion, nobody should ever be without homeowner’s insurance.
There is no singular “one size fits all” answer to this question.
The generally accepted amount is enough to rebuild your home and replace its contents in the case of a total loss (e.g., a devastating fire). But specific amounts might not quite cut it.
For example, local construction costs will enter the equations, as will the type of home you have and its age. Are there features that are unique to your home that might be difficult to rebuild?
Another aspect are your home’s contents: do you want full replacement value, or will you accept whatever the contents are worth now? I know somebody with an impressive (and old) vinyl album collection. He has it insured not on the current value (which is essentially “what a used record store would pay for them – about $1 an album”), but what it would actually cost to replace them.
These are things you must talk to your insurance agent about when tailoring your coverage. The last thing you want after a disaster is to need an entire new professional wardrobe, but receive an insurance settlement that says “thrift store value”. So check your values accordingly, and tailor your coverage to that.
There are all different types of coverages available. Of course, you will have basic “rebuild the home” coverage and coverage for your home’s contents. And you will also be required to have liability coverage in case someone gets hurt on your property.
However, beyond those, there are other types of optional coverages that could come in very handy.
True story: in my own home, we had a sewer pipe break. It broke a little after the house, but before it connected to the town’s sewer line. In other words, my responsibility. The plumbing company had to bring a backhoe in, and it took two days to fix. It also cost me $6,000.
Then, I found out for a mere $50 a year extra, I could have had what’s called “service line coverage” which covers the water and sewer lines. My repair would have been covered had I purchased that.
Suffice to say, I NOW have it for next time.
There are also add-ons for home electronics, appliances, and some home insurers are offering maintenance coverage, which could be a good idea for many people.
If you have valuable items, like expensive jewelry, artwork, rare antiques, etc., you need to talk to your insurance agent about these and make sure you have adequate coverage.
A friend of mine got robbed once. They took all of her expensive jewelry, and her father’s coin collection as well. They were shocked to find out there was only minimal coverage for these because they never disclosed their value to the insurance company. The jewelry and coins were almost a total loss, despite my friend thinking she had $150k in coverage. She did, mind you, but that only covered basic household items, and not overly expensive items, which need to be appraised and itemized.
So if you have anything out of the ordinary value-wise, you need to disclose these to your insurance company, and make sure they are covered for their full value (note: this will make your premiums go up, of course, so it does pay to shop for the best rate.)
Many companies will offer home insurance discounts for having a security system and/or advanced smoke and CO detectors. “Smart homes” can get a discount with many carriers.
Also, the better your credit, the better premiums you can usually get. You can also raise your deductible to get a better premium.
One thing I do is I bundle my car and home insurance with the same carrier, which gets me a discount. But it also allows me to get an “umbrella policy”, where I get an extra $1 million in liability on both my home and vehicle for a very low price.
Basically, this amounts to extra peace of mind in case there is an accident and I am found liable.
It can be confusing to sort through all of the options and homeowner’s insurance companies. But that’s why we’ve done the hard work for you and reviewed the top homeowner’s insurance carriers. Take a look at our unbiased reviews above, and choose the best option for you and your family.