How much should I pay for my home insurance?
As little as possible? Obviously nobody wants to pay more than they need to, but you need to be careful not to pay so little your coverage is meaningless. That could cost you more than is bear thinking about. To illustrate this we are going to have to fall in the scare mongering techniques I generally despise but I feel make the point here nicely. We live in a world where a burglar that comes in your house can sue you for injuries he suffers when he is trying to carry out his job, which is to rob you from your valuables.
So if a burglar can sue you for tripping in your premises imagine what a worker fixing your bathtub or a distraught mom whose son got permanently injured by your lawn mower. You guessed, it just got much worse.
There is therefore little doubt that home insurance is necessary. How much do you need? Enough. Enough to cover any liability you have for damages and injuries occurring in your home. You also need to have enough money to rebuild your house in the event of a natural disaster or accident. This is where things get tricky. It would be difficult if not impossible to have insurance coverage for every possible eventuality; it would cost an absolute fortune to start with. However it would be much more expensive to be the victim of a flood, and lose everything you have, including your home.
Nobody can really tell you what you should and shouldn’t pay or include in your home insurance. What we can do it point out some holes in your coverage you would like to fill in.
Home contents.
Sometimes the contents of your homes, the electronics, clothes, jewelry, cash, cars, speed boats, yachts, etc… cost more than the damages to the structure, roof or walls of a house. A key point to look out for in this setting is the limits on your home contents. For many insurances the combined limit on all the contents of your house is $1000. This is obviously not enough if you have any amount of valuable in your home.
Check out your existing home contents to see if you have enough cover. If you don’t, you are not paying enough for your home insurance.
Special hazards. It is impossible to cover for all possible risks. You need to prioritize. It is theoretically possible for a house on mount Fuji (Japan) to get flooded, just extremely unlikely, you are better forgetting about flooding and making sure you are covered for earthquake, you do live on the arch of fire, one of the most earthquake prone areas in the world. However if you live in New Orleans, mmm, you get my drift, right? Flooding maybe should be a little bit of a priority for you.
These are just a few of the concerns you must address when deciding if your home insurance is adequate or not.