Homeowners Ins.?

Question

I just switched homeowners insurance companies, my mortgage is $80,000 and I insured the house for $200,00 does that sound about right? Or too much insurance or too little?

Answer 1

Depends on what you have in it -  when you're insuring your house you have to think about what it will cost to replace the structure and everything in it should something happen. Usually the plot of land your house sits on is worth more than the building though. Make sure you have included all of your important stuff (jewelry, electronics, firearms, etc) so you can put a similar building up on the land and re-furnish the house in a like manner.

Answer 2

You also have to think about the debris removal if something happens to your home and it is a total loss.  Sometimes, this is thousands of dollars.  The best way to determine if this is the correct amount for your home is to see what the going rate for building a home of your size and  quality is going to cost in your area.  Then multiply the square footage of your home by the cost to build new.  This should give you a good estimate.  Also remember that when a catastrophe hits, such as a hurricane, building costs increase.  You may not be in a catastrophe  prone area.  However,  you don't want to be under insured should your house be destroyed in a hurricane.

Answer 3

How much it costs to rebuild the house, or the insured value of the house, has NO BEARING on how much your mortage is!

My house is paid off!  Does that mean I should have zero coverage?  Of course not!  The policy needs to be written for how much it would cost to rebuild the house, if it burns to the ground.  In most areas of the USA, that works out to about $200 per square foot.

YOUR AGENT should be coming out to look at your house, and calculating the replacement value of your house.  No one here has any clue how much it would cost to rebuild it.

Answer 4

Sounds a bit much to me.  The maximum  you should insure is the amount it would cost to rebuild your home if something were to happen.

If that number is $200K then you should be about right.