How Much Home Insurance Do You Really Need?
How Much Home Insurance Do You Really Need?
Having home insurance is a smart move — but overpaying for unnecessary coverage? Not so smart.
Let’s break down how much coverage you actually need, based on your home’s value, location, and risk.
🏠 What Does Home Insurance Cover?
- Dwelling coverage – protects the structure of your home
- Personal property – covers your belongings
- Liability protection – covers injury lawsuits
- Loss of use – pays for living elsewhere during repairs
- Medical payments – for injuries to guests on your property
📏 How to Calculate the Right Amount
✅ 1. Dwelling Coverage (Most Important)
Use the rebuild cost, not market price.
- Rebuild cost = square footage × local construction cost
- Example: 2,000 sq ft × $150 = $300,000
💡 Tip: Update this yearly, especially if construction prices rise.
✅ 2. Personal Property
Usually 50–70% of your dwelling coverage.
- $300,000 × 50% = $150,000 personal items coverage
- Take inventory: electronics, furniture, appliances, jewelry, etc.
✅ 3. Liability Coverage
Start with $300,000 minimum — more if you have a pool, pets, or rental guests.
🚧 What’s Often Underestimated?
- Natural disaster add-ons (floods, quakes) are not always included
- Valuables like jewelry, art, or collectibles may need separate riders
- Inflation protection can help your coverage stay up-to-date automatically
📊 Quick Coverage Checklist
| Coverage Type | Recommended Minimum | Optional? |
|---|---|---|
| Dwelling | Rebuild Cost ($/sq ft × size) | No |
| Personal Property | 50–70% of dwelling | No |
| Liability | $300,000–$500,000 | No |
| Medical Payments | $1,000–$5,000 | Yes |
| Loss of Use | 20–30% of dwelling | Yes |
| Natural Disasters | Based on location | Yes |
| Inflation Protection | Auto-adjust yearly | Optional |
🧮 Use Online Calculators
📢 Don't guess — calculate. Underinsuring can cost thousands. Overinsuring wastes your money. Use rebuild cost, personal inventory, and location-specific risks to get it right.
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