blog
How much home insurance do you actually need?
by
Midlands Team
Coverage isn’t about insuring the house for its sale price. Here’s how to size a policy to what it would actually cost to rebuild.
Insure the rebuild, not the market price
The most common mistake is insuring a home for what it would sell for. The sale price includes the land, the neighborhood, and the market—none of which burn down. What you actually need to cover is the cost to rebuild the structure from scratch, with today’s labor and material prices. In most areas that figure is lower than the market value; in some tight markets it’s higher. Ask for a replacement-cost estimate rather than guessing from your listing price.
Add up what’s inside
Contents coverage is usually set as a percentage of the building amount, often around half. That default is fine for a sparse home and far too low for a full one. Walk through each room once and tally the big-ticket items—electronics, appliances, furniture, anything you’d have to buy again. If the total runs past your contents limit, raise it. The exercise takes an afternoon and tells you more than any online calculator.
Don’t skip liability
Liability is the quiet part of a home policy and often the most valuable. It covers you when someone is hurt on your property or you’re held responsible for damage elsewhere. The premium difference between a low limit and a high one is small because serious claims are rare—but when they happen, they’re large. If you have savings or income worth protecting, carry more liability than the minimum, not less.
Match the deductible to your savings, not the premium
A higher deductible lowers your premium, which is tempting. The honest test is simple: could you pay that amount tomorrow without strain? If a 2,000 deductible would mean borrowing, you don’t have a cheaper policy—you have a gap you’re hoping not to fall into. Set the deductible at a number you could absorb, then take whatever premium that gives you.
Revisit it once a year
Coverage drifts out of date quietly. You renovate a kitchen, buy a few years of furniture, and the policy still reflects the home you insured five years ago. Once a year—renewal time is a natural prompt—reread the limits and ask whether they still match the house and what’s in it. Ten minutes now is cheaper than discovering the shortfall during a claim.
