How Much Home Insurance Do I Need?

Whether you’re a new homeowner or someone who has been making improvements and accumulating possessions for years, the question “how much home insurance do I need?” is a reoccurring concern for everyone. Knowing how to insure your home requires an analysis of the cost to rebuild, provide a temporary living space, replace your belongings, and protection from liability claims.

Keep reading to learn about the kind of coverage you need, then contact Oliver L.E. Soden Agency to review homeowners insurance policies that fit your needs.

How Much Home Insurance Do I Need?

Many homeowners purchase insurance to cover the minimum amount their mortgage lender requires. That probably does not cover rebuilding your home and replacing all your belongings.

You must consider what standard coverage will pay for and if there is any additional coverage you need.

The average homeowners’ claim payout in 2020 was $13,955. When you look at different payout categories, the average was $820 for credit card claims and  $77,340 for fire and lightning claims.

These statistics indicate the value of purchasing sufficient home insurance outweighs the cost. Standard homeowners insurance coverage includes:


The minimum amount your lender requires you to hold may not be sufficient. They require coverage for their investment. You need coverage that equals the home’s replacement cost if you need to rebuild.

If you are wondering how to calculate replacement costs, the steps are easy. Multiply the square footage of your home by the square footage cost of building materials in your area. Add in the price of built-in appliances and fixtures in the house, and you have a replacement value.

Factors impacting cost include the age of the home, square footage, number of rooms and bathrooms, architectural style, and special features, including fireplaces, arched windows, and more.

Other Structures

This coverage generally runs between 10% to 20% of your dwelling coverage. The determination is based on the amount necessary to replace any additional structures on your property, including garages, sheds, and pool houses.

You may want to check on coverage for personal items kept in your outbuildings.

Personal Property

Coverage for personal assets should average between 50% to 70% of your dwelling coverage. Make sure you have sufficient coverage to replace all items.

Check with your insurance company regarding coverage for high-end items such as jewelry, collectibles, guns, electronics, furs, or other items of high value. These items may require an additional rider.

To protect your assets and determine coverage needs, take a home inventory that lists all items and their cost. This serves two purposes. It ensures you purchase sufficient coverage and is a record you can provide to your insurance company when filing a claim.

When insurance policies pay claims on personal property, they pay a depreciated amount based on the age of the item. For an additional cost, you can upgrade your policy to receive replacement costs.

Loss of Use

Loss of use is usually 20% to 30% of your dwelling coverage. It provides you with funds for additional living expenses for up to twelve months. Depending on the size of your home and the time it will likely take to rebuild, you may want to check into unlimited loss-of-use coverage.

Personal Liability

You will want coverage of at least $100,000, but a $300,000 to $500,000 policy will provide you with the best coverage if someone suffers injury on your property. This insurance pays medical expenses, legal fees, funeral expenses, and other costs associated with a liability claim.

Claims often paid by homeowners liability coverage include dog bites, toxic chemicals, falling on wet or broken stairs, walkways, or paths, or because of poor lighting. Talk to your insurance agent about items on your property that increase liability. This includes hot tubs, swimming pools, tennis courts, riding stables, and more.

The amount a person can recover in a personal injury lawsuit will depend on the severity of their injury and the extent of the medical care they require.

Get an Answer On Coverage Needs

To get an answer on “how much home insurance do I need?” request a quote from the Oliver L.E. Soden Agency. We will provide a fast, easy response, presenting you with several options tailored to your needs. Contact us today!