To find out whether you have adequate home insurance coverage, first ask a local contractor to provide an estimate of what it would cost to rebuild your home. Account for the value of your furniture, clothing, computers and electronic equipment, and other household items to complete the estimate.
Here are a few things you will want to keep in mind:
1. You should have sufficient home insurance to replace your home and its contents if everything is lost in a fire or another covered disaster.
2. Recent additions that add square footage to your home, as well as major changes to existing space, will likely yield a need for higher replacement coverage.
3. Own a condominium or apartment? Find out what your association’s insurance policy covers and which expenses, beyond replacing your personal possessions, will be your responsibility.
4. If you have a taste for fine jewelry, furs and sterling silver flatware, and/or if you collect firearms, consider having separate riders to cover these prized possessions.
5. Even if you don’t live in a high-risk flood zone, you might want to buy flood coverage through the National Flood Insurance Program. Home insurance doesn’t typically cover flood damage.