| To
determine the cost to rebuild your home,
consult with an appraiser or a local builder.
Note: You only need to insure the structure.
You do not need to insure the land.
In
the event of a serious loss -- a
fire, for example -- how would I
fare?
In
most cases you should insure your dwelling
and its contents for their replacement
values, which will likely differ from the
dwelling's market value and your personal
property's depreciated cash value. Also
consider getting a policy with automatic
inflation adjustments so that the replacement
cost keeps pace with the general level
of price increases.
Standard
coverage insures your possessions at 50
percent of the value of your dwelling.
Many people boost this coverage to 75
percent with additional protection. There
are individual limits on certain types
of personal property (see below).
Free-standing
structures on your property (garages, gazebos,
tool sheds, etc.) are also covered, with
standard protection equal to 10 percent
of your dwelling. Trees and shrubbery normally
can be replaced up to a limit of 5
percent of your dwelling coverage. As is
the case with your personal property, you
should assess your needs to determine if
you want to pay extra amounts to increase
these levels of protection.
Also,
pay attention to what might happen if you
were to lose the use of your home for an
extended period. Loss-of-use provisions
are important elements of home owners policies,
and coverage levels up to and exceeding 30
percent of your dwelling's insurance aren't
unusual.
If
someone not covered on my health insurance
were to suffer a serious injury in my
home, and I were found liable, how
would I fare?
The
standard level of liability protection
in home owners policies has been $100,000,
but it's rising all the time. Today, $300,000
is not an uncommon amount, and even higher
levels are recommended for affluent home owners
with substantial assets to protect.
In this situation,
"umbrella" policies have become
popular. These policies provide excess liability
coverage on both your home owners and automobile
policies, and are relatively inexpensive
(you normally need to carry both underlying
policies with the same insurer).
Can
I afford a high deductible--say $1,000--to
save money on the?
The
differences in annual premiums between policies
with deductibles of $250 (you pay the first
$250 of damage, the insurer pays the rest),
$500 and $1,000 may easily be worth twenty
to 30 percent of the annual premium. So,
if you can afford the expenditure, and want
to place a small bet that you won't face a
home-related loss, consider a larger deductible. |
Mortgage Insurance Guide 
