How Much Money Should My House Be Insured For?

As a public adjuster assisting homeowners with insurance claims for as long as I have, I have seen much suffering by policyholders who learned too late that their home insurance policy insured their bank … and not them.  Did you finance a home for $200,000, purchase a $200,000 homeowner’s policy, and think it sufficiently insures you like they did?  If so, there is time to fix it before the tornado or fire.

Property values rise and fall based on many factors that have absolutely nothing to do with the house, itself.  They are too many to list but it is enough to know that the appraiser that assigned the value to your home when you closed on it DID NOT base his figure on the cost to rebuild it … but your insurance policy should.  That is what you will need help to pay for after it is destroyed.

Imagine the dilemma of the under-informed homeowner who negotiated the deal of the century,  insured the house for the amount he borrowed from the bank, and then learned from his contractor after the fire that cost to rebuild it was twice the amount he insured it for.

I have listened to the shrieks and sobs from the policyholders who have called me for my help when I have explained to them how their insurance company has no obligation to pay them more than for the amount of coverage they purchased.  It’s sad and, for them, sometimes life-changing.  Everything they owned was lost to fire and only their mortgage company is fully indemnified.  Homeless, they must rebuild their material lives from the ashes of their former home, for all practical purposes, out of their own pockets.

Regularly check the amount of your coverage from the annual declarations page you receive from your insurance company and compare your current coverage to the current costs to rebuild your structure should a catastrophe strike.  Be certain that you … and not only your bank … have home insurance.

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