Do You Have Enough Homeowners Insurance?

Homeowners insurance is not required by law, however, when you finance your home through a mortgage lender, they will most likely require you to take out a homeowners insurance policy. Paying into such an insurance policy each month assures that the necessary funds will be there for repairs and other issues should the need arise.

Of course how much insurance you need is one of those “it depends” situations.

The Federal Reserve Board estimates that most American homeowners spend anywhere from $300 to $1,300 annually on insurance policies for their homes. However, it definitely depends on where you live. For example, coastal homeowners pay significantly more because of the risks associated with storms, wind and flooding as opposed to those in rural areas who pay much less.

Another factor that determines how much is put into homeowners insurance is that of property values. This can become very tricky because of the wide disparity in home values throughout various regions of the country. Homes in many metro areas are much more expensive, such as in New York, NY, where the median home value is $571,700.

The other point to consider is income. In areas where folks are making substantially more, they are also buying much more expensive homes which necessitates insuring them for more than the national average.

So, if we are not all paying the same for our homeowners insurance, how can we know if we have enough?

The basics should take care of the replacement cost of your home, excluding the land. Of course, the contents of your home should also be covered.

Beyond that, it is advisable to consider “worst case scenario” coverage, especially if you live in an area prone to natural disasters. For example, the cost of relocating should your home suffer damage, plus meals and living expenses should also be included. Yet another concern for homeowners is the prospect of someone being injured on your property, such as a pool accident or falling down the stairs.

If you purchased your policy in a rush and are not really sure as to what it covers, go over it with your insurance agent. Keep in mind that a standard policy may be on the minimalistic side and you may not know what it actually covers.

Here is a look at the most common issues that insurance adjustors deal with:

Water Damage

Common claims includes problems caused by burst pipes, leaky roofs, overflows from bathtubs, and faulty appliances. When undetected these in turn lead to the even bigger and more costly issue of toxic mold, which can be hidden for months.


A homeowner is the responsible party if any one is injured on their property. Play it safe by taking all of the necessary precautions that pertain to your property, such as fences around pools and ponds, sturdy handrails, secure steps and so on.

Animal Attacks

Dog bites are the main issue here, and the statistics are alarming. According to insurance information website,, “the average dog-bite cost per claim in 2012 was $29,752. Dog breeds frequently excluded by carriers include pit bulls, Akitas and German shepherds.”

Don’t think that signs such as “Beware of Dog” will free you of responsibility should your pet attack someone. Even if you live on a private road, you are responsible if your pet bites someone who steps onto your property. It is recommended that pet owners include $100,000 additional personal liability coverage on their policies.

Fire Claims

In order to recover losses from a fire, the only way to ensure that it happens is through what’s known as “proof of inventory.” Make a comprehensive inventory of the contents of your home and document it with photos and video. Other considerations are fire policies that cover the expenses of housing, meals, clothing, and other daily essentials that would be impacted should you lose everything in a fire.

Before running out and tripling your homeowners coverage, a little DIY boo-boo proofing may be in order. You could hire a home inspector or do it on your own, but the first task is to make sure that each of your home’s systems are up to code. Next, take steps to bolster your home against weather and natural disasters. Along with the usual safety measures of storm shutters and smoke alarms, consider upgrading your roof, alarms and deadbolt locks. Believe it or not, making your home more secure can also potentially save you money on your homeowners insurance!

Other helpful resources:

Ways to Save Money on Homeowners Insurance –

Home Insurance FAQs –

Credit Scores and Home Insurance –

Easy Ways to Get Cheap Home Insurance –



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