This is where homeowner insurance can act as a safety net to protect your investment. Here’s how it does that:
The Minimum Hazard Coverage. If you’re paying a mortgage on your home, you might be required by the bank to acquire the minimum hazard liability insurance. Since the house technically is still owned by the bank, this insurance is brought in place to cover any losses that might be incurred on the house owing to an unfortunate event – you may not have enough money to pay off the bank, but the insurance will be enough to cover the losses. Which is great for the bank, but what about protection to cover your family. Many homeowners do not have enough coverage to carry them through a loss.
The Protection You Need. Disasters happen unannounced. What happens if your home is completely destroyed in a disaster? In a situation like this, it is the money you invested in a homeowners insurance policy that will help you provide for your family even without a roof to live under. Plus, you will have something to start off with.
Rebuilding & Replacement. If your homeowner insurance covers rebuilding costs, any structural changes that are required or you wish to incorporate in your house can and will be accommodated. Also, if any of your expensive furnishing and/or décor gets damaged, your homeowner insurance will cover the costs of replacement. Just make sure your insurance is adequate for your needs.
Legal LiabilityLawsuits can be expensive. You wouldn’t want to harm someone intentionally, but what if someone gets injured on your property? You would be liable, and the homeowners insurance can protect you from these unexpected lawsuits.
Understanding how much insurance you should have starts by projecting the financial needs your family would have over the course of time plus a professional survey.
There are a number of calculators out there that will give you a ballpark estimate, but this is your family we're talking about. I caution everyone not to rely solely on any "rule of thumb".
For more on homeowners insurance and just how much of it would be right for you, get in touch with your nearest insurance providers. Make sure you survey well to get the most out of your agreed premium payments. Consult a financial professional who will personalize a strategy based on your family's specific needs.