Personal Finance » Insurance

Do you have the right home insurance?

Insurance is designed to help you protect your assets. And one of your biggest assets is your home. A home is an expensive purchase, and when damage is done to your home, it can be costly to repair.

Insurance can help you better handle those costs. When you pay regular premiums, the insurance company promises to pay the cost of damage to your home, and to its contents. Home insurance can also provide you with liability protection if someone is injured on your property, and compensation for items stolen from your home.

Without insurance coverage, all of these items can be financially devastating. With insurance coverage, you have a way to avoid having it all come down on you at once.

What is the right home insurance coverage?

Your first order of business is to determine whether or not you have the right coverage for your home. At the most basic level, you want to make sure that you have enough money to cover the cost of replacing your home if it is destroyed. You also want to make sure that you have enough contents insurance to replace the items in your home. Finally, consider a minimal amount of liability insurance so that you can offset costs if someone is injured on your property and needs medical attention.

It’s important to look a little deeper as well. Some policies don’t cover all types of damage. You might not have protection from flood damage, or damage from earthquakes. If you run a home business out of your home, you might not be completely covered, either. Some policies only offer very limited coverage of home business equipment in your home. Finally, if you have particularly valuable items, such as fine paintings or heirloom jewelry, the contents insurance you have might be insufficient.

Look carefully at your policy papers to determine what, exactly, is covered. You might need to purchase additional coverage to make sure that your individual situation is fully taken care of. This is especially true in the case of home business activities, and in the case of, particularly valuable items.

Review your coverage over time

Once you purchase your home insurance coverage, you aren’t done. You need to check up on the status of your policy over time. If your home has appreciated since you bought it, there is a chance that it is no longer completely covered. If you bought your home for $150,000 and got a policy for $200,000 more than 15 years ago, you might find that you are short on coverage. What if your home is worth $275,000 now? What if you have bought more things for the inside of the house, so the contents are worth more?

Regularly review your home insurance coverage, and determine whether or not you need an increase. It might mean a higher premium (you can offset a higher premium with a higher deductible in many cases), but it also means that you know you are covered. And you can’t put a price on peace of mind.


  1. Jane Savers @ The Money Puzzle

    I do have the extra liability insurance and I purchased it after a friend was sued by a visitor to her home who claimed serious knee injury exiting their home and claiming to stumble on an exterior step that was not a standard height.

    My friend’s insurance did pay the claim but she worried herself sick for months while lawyers bickered.

    Peace of mind is worth a few dollars every month.

  2. Cathy

    Hi Miranda good article I just want to remind our readers that this is a very good reason to use a broker rather than a 1-800 call in or online. The services are free to you and they review and update your policy. As well when a claim does arise a good broker will assist you through the process and be your advocate. We have had many exceptions made for clients through the diligence of the brokers.

  3. nic

    providers before signing up for any car insurance policy in order to arrive with the best course of action. Knowing things regarding the factors that affect

  4. Cyril Thong

    Using an insurance broker is a good idea but it should not replace doing one’s homework. I am not sure brokers cover all insurance companies or just those that pay them the best commissions. I have had lower premiums quoted to me for home insurance and when I brought this to my broker, she dropped her original quoted annual premium. Home owners should especially be aware when buying earthquake insurance that the deductibles have skyrocketed in the last 2-3 years but vary with insurance companies. In the end, your insurance is only as good as how your insurance company treats you in the event of a claim.

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