How much homeowner’s insurance coverage should I have for my ‘dwelling’ coverage?

This is twofold; you don’t want to be underinsured and or over insured. All to often people have the misconception that they need to have their ‘Replacement Cost’ in the amount of their mortgage loan. This is not the case….the dwelling replacement cost should be calculated by how much it would cost to rebuild your house from ground up in the event of a tragic accident or storm. The rebuilding cost for your high value home needs to include labor and supplies (keep in mind that those rates can significantly increase after a storm when there is high demand and short supply.) Depending on the down payment, the mortgage loan is approximately 80 or 90 percent of the value of the house. This is a classic case of underinsured homeowner’s insurance coverage

It’s important to understand that reconstruction cost is not related to the market value of your home.                                                 

    Reconstruction Value    

Reconstruction cost is the amount it would cost to rebuild your home if it were destroyed. It includes costs like materials and labor and city / count fees. It is not what a buyer would pay for your home or the amount of your mortgage. It does not include the value or cost of the land.          


market value

Market value is the price a buyer would pay to purchase the home, including the land and property in its current condition. It takes into account changes in the housing market and the economy. It does not take into account the cost to rebuild the home. 


Uninsured / Underinsured Motorist Coverage

Does your auto insurance policy include the Uninsured / Underinsured Motorist coverage?  This is a coverage that is not mandatory but should be a must on all policies. The coverage protects you in the event that you are in an auto accident and the person that hit you does not have insurance or enough insurance to cover the damages to your vehicle or any medical expenses incurred.  This coverage compensates you, members of your household and your passengers, up to a limit that you select, for bodily injury from an accident with a motorist who has no insurance or is underinsured.  Uninsured Motorist protection can also compensate you, if you're injured by a hitandrun driver or if you're injured as a pedestrian.