How much home insurance cover is enough?
Knowing how much you should spend protecting your assets when you might never have to use the insurance is an interesting question. Obviously you should get as much insurance as you can afford, but when does it start getting ridiculous. For instance would it make sense paying a 500$ a year on the insurance of a car that is worth 1000$? Probably not. The same applies to homes, you want to have enough cover so that you don’t face insurmountable losses in the case of an accident but you don’t want it to be your main expense. This article will cover the main areas a good home insurance should include and some practical help on how to decide how much to spend.
A good home insurance should cover these four basic points:
a) The structural components of the building.
b) Your personal belongings, furniture, jewls, electronics and other hardware in the house.
c) The living expenses and miscellaneous bills that need to be paid after a serious home accident.
d) Your liability to others.
Let’s have a look at these factors seperately.
The structural components of the building. Good home insurance will allow you to at least rebuild your home in case it is destroyed by some accident or natural disaster. This part of the coverage must be substantial as the costs of rebuilding after extensive damage can be very high.
Have a good look at the cover your insurance provides under so called acts of God. This and other loopholes help insurance companies to try and wriggle out of the responsibility of honoring an insurance policy.
Your personal belongings. If you suffer an accident or natural disaster you don’t want the loss of your personal belongings to be added to the list of things you loose. Especially if you have expensive equipment, jewels or art work you must make sure you have sufficient cover for the assets you store in your home.
Living expenses in case of an accident that would not allow you to stay at home.
It is important to make sure you will have enough to pay for a hotel, good medical care and all the necessary cash and equipment to get you by after you file an insurance claim.
Your liability to others. This is probably the most important section of your home insurance. If you don’t have any insurance for damages you suffer, probably the worst thing that can happen is that you lose everything but liability to others could send you to bankruptcy faster than you could say Jack Robinson.
Be smart, before you choose your car insurance, think about your circumstances, the risks you take and the price of the goods you wish to protect. Remember that time spent planning and thinking now could save your life in the future. Knowing how much you really need will help you avoid stress and wasted time in the future.