Owning a home in Southwest Florida is a blessing. But with the beauty of a tropical environment comes dangers that can take out your subtropical home. Homeowners insurance protects your home, the contents in your home and other assets in the event of fires, theft, or disasters. Things like floods and earthquakes are not covered by a standard policy and require additional coverage.
How much coverage do you need? Your home insurance policy should cover enough to rebuild and furnish your home if there was a problem.
It is a good idea to ask a home builder to walk through your home and give you an estimate of what it would take to rebuild. Point out unique or expensive details that would add to the replacement cost.
When you have determined the replacement cost of your home, you will need to know what kind of coverage you want.
Quoted content below from: http://guides.wsj.com/personal-finance/insurance/how-to-insure-your-home/
• Guaranteed Replacement Cost Coverage— This means that the insurer will pay for the rebuilding of your home no matter the cost. These policies are hard to find these days. • Extended Replacement Coverage— Many insurers offer coverage that caps the payout at around 125% of your home’s insured value. • Inflation Guarantee (or Guard) — This feature makes sure that your home’s insured value stays current with the marketplace.
If you get a reliable appraisal, extended replacement coverage and an inflation guarantee, you should be in good shape. The appraisal provides a realistic starting figure and the inflation guarantee makes sure that your home’s price stays current. The 125% coverage means that, even if construction prices outpace inflation, they probably didn’t outpace it by 25%, so you should have enough money for whatever work you need done.
One last thing: The law requires you to have flood insurance if you live in an officially recognized high-risk area. To find out your flood risk and to find plans (which are offered by the government), go to floodsmart.gov.
When it comes to protecting your possessions, you may want more coverage than your standard policy allows. If you have anything of exceptional value (a family heirloom, a piece of art, jewelry, etc.), you should insure it separately. Insurers will charge extra for this coverage (something like an extra $10 on your monthly premium per $1,000 of value insured), but it pays to be covered.
Also keep in mind that there are two different kinds of coverage when it comes to personal articles. There’s “actual cash value” and there’s “replacement cost.” You want coverage for replacement cost. Actual Cash Value Insurance is what you’d get if you sold your valuable today — a lower amount than what you initially paid. Replacement Cost Insurance pays you the amount of money you’d need to buy a brand-new item to replace your old one. Liability Coverage Say a guest stays at your home and slips on the floor and sprains his ankle. He decides to sue you. Your homeowners policy includes liability coverage in case you lose the court case. Generally speaking, standard policies offer $100,000 to $300,000 of liability coverage.
Supplemental liability coverage can boost your protection to $1 million or more. If you don’t own a car, adding that kind of coverage can be relatively cheap—less than $100 per year—and isn’t a bad idea. If you do own a car (putting you at greater risk for causing damage to people and property), expect to pay $300 to $400 a year. Check out your auto policy to see what kind of coverage you already have.
Your Deductible Like auto or health insurance, your homeowners insurance has a deductible (the amount you must pay before coverage kicks in). Like those other policies, you should opt for the highest deductible you can afford. If you do, the cost of your insurance premium (the monthly bill you pay) will surely be lower. Plus, a low deductible forces your insurer to cover more of your costs — costs they pass on to you in the form of increased premiums.
Remember: You should not use insurance to cover every conceivable expense, just the big ones. If reinstalling a gutter will cost you $200, pay the $200 — don’t start filing claims for it. Insurers hate it when you file too many claims, and may raise your monthly premium or even cancel coverage because they’ll view you as too risky. It’s not about gutters—you want the insurance when you have to pay for a whole new roof.
A good rule of thumb to follow: If you can fix anything for less than $1,000, don’t file a claim.