Repair Or Replace? How To Assess Whether Your Homeowners Coverage Is Enough

18 September 2014
 Categories: , Blog

If you're like most Americans, your house is the most expensive item you've ever purchased, and possibly one of your largest investments.  When assessing the amount of insurance you'll need to cover your home, should you look at the cost to fix your house or the cost to rebuild? What about coverage for your personal possessions, or to remove debris remaining after a fire or natural disaster? Read on to learn more about the various factors that may impact the amount of insurance coverage you'll need.

Repair cost vs. replacement cost

The biggest factor in your level of insurance coverage deals with whether you'd rather rebuild your home after an accident or disaster, or simply tear your home down, sell, and move elsewhere. If you plan to rebuild, you'll want to not only investigate the current market value of your home, but how much it would cost to construct a new home. Often, the market value of a home may be dwarfed by the replacement cost -- or vice versa. Be sure that you are adequately covered for the path you think you'll choose.

Coverage to replace your possessions

Another factor in your insurance coverage is replacing your appliances, clothes, electronics, and other personal items. If your personal possessions all disappeared tomorrow, would you replace everything? Would you be happy with thrift store finds, or would you have to buy new?

Many homeowners make the mistake of valuing their personal possessions based on what they'd fetch at a yard sale, and don't consider how much it would cost to replace each of these possessions by purchasing new. Other homeowners would welcome a chance to downsize, and may not want to carry insurance to cover possessions they would choose not to replace. You may want to walk through your home and evaluate which of your possessions would have to be immediately replaced, which would be eventually replaced, and which can be done without. 

Other considerations

A final factor in your insurance coverage is debris removal. Unless a tornado neatly lifts your house off its foundation and deposits it in a body of water, an accident or disaster that requires an insurance claim will also likely require some heavy-duty cleanup. You'll want to ensure not only that this debris removal is covered, but that the dollar amount is based on a realistic estimate of the cost to clean up and remove debris (taking into account your house size, lot size, and ease of accessibility for heavy equipment). 

For more information, contact an insurance agency like Livings Insurance Agency.