Homeowners Insurance Coverage Options

If you have a mortgage, you are required to have homeowners insurance, but it’s up to you how much coverage you have above and beyond what is required by your mortgage lender. If you own your home outright, you may still want to consider a homeowners insurance policy to protect your assets in the case of damage to your home or an accident on your property.
Generally, you need enough homeowners insurance to cover the following:
The replacement cost of your home: Replacement cost is the amount it will cost to rebuild your house, excluding the land. It’s not what you paid for your house, because depending on current construction costs, the price of rebuilding it may be more or less than you paid. Today, policies in the US are required to cover 100% of the cost of rebuilding your home. (Policies issued before 1990 were not required to cover 100% of rebuilding costs.) The replacement cost of your home can change because of improvements you’ve made or rising costs of construction materials, so you may need to revisit your coverage annually to make sure you’re covered adequately.

The contents of your house: Your personal property includes furniture, computers and other electronic equipment, clothes, furs and jewelry (up to a certain amount), artwork, etc. Most policies consider the value of your personal property to be approximately 50% of the amount of insurance you have on the house itself. If you think your personal items are worth more than this, you might want to complete a Property Inventory (PDF) of your possessions, listing and photographing all the items you want covered.

The cost of living elsewhere: This is important if your home is damaged and you have to live elsewhere while it is being repaired. Coverage should cover rent or hotel bills, meals, and other living expenses incurred while you’re out of your home.

Liability: This covers you in case someone is injured on your property and needs medical care, or decides to sue you. It also protects you if something in your house or on your property causes damage to another house – for example, your tree falls on your neighbor’s garage.
Other Types of Property Coverage
Umbrella Liability Policy: Umbrella coverage is liability insurance that protects your assets in cases when your underlying policy’s liability coverage is not adequate; for example, if someone is injured on your property and decides to sue you, your homeowners insurance would probably not be enough to pay legal fees or judgments against you. An umbrella policy will help protect your assets and make sure that a catastrophic claim will not put those assets at risk. You’ll also want to consider a policy if you have high-risk recreation equipment on your property, such as a swimming pool or trampoline.

Personal Floater: Valuables such as jewelry, watches and furs are protected by your homeowners policy to specific limits. If the value of these items exceeds the limits of your policy, you may want to consider a personal floater to protect your valuables up to the value of the items. Covering each piece separately may cost more, but it will protect you from a wider range of losses – like losing your engagement ring in the ocean, or leaving your expensive camera in a taxi – than your homeowners insurance policy may cover.

Flood Insurance: Standard homeowners insurance policies do not cover flood damage. If you live in a designated flood zone, you are required by law to have this kind of coverage. Flood insurance is available as a separate policy from the National Flood Insurance Program and from a few private insurers. To determine if you live in such a designated flood zone, or if you are just interested in obtaining a policy, please call Wells Fargo Insurance to learn more about how you can get flood insurance.
Call Wells Fargo Insurance to get all your questions answered and find the homeowners insurance coverage that works for your situation.