North Carolina Homeowners Insurance

What is the right amount to insure your home for?  Many homeowners often do not know the answer to this basic question.

Some believe they should insure their home for the purchase price, others feel they should at least insure their home for the amount of their primary mortgage.  The truth is, neither of these approaches give you the appropriate coverage amount for insuring your home.

The best way to calculate the right amount of insurance for your homeowner policy is to calculate your home's RECONSTRUCTION COST.  While there are many commercial reconstruction cost calculators available in the marketplace, these are fairly expensive for the average homeowner as they will only use it once.  Allstate, and most insurance companies utilize their own in-house reconstruction calculator.  This program, after inputting general information about the home, produces an accurate reconstruction cost for your dwelling.

The last and some say most accurate way to calculate the reconstruction cost of your home is to have an appraiser utilize a REPLACEMENT COST METHOD appraisal.  When you initially purchase your home, your lender will require an appraisal to be performed to justify the loan amount.  However, most bank appraisers favor the more common COMPARATIVE ANALYSIS APPROACH to determine a home's market value.  In this method, the appraiser simply compares the home's overall features to comparable homes in the neighborhood that have sold within the last six months or so.  As this method may be adequate to determine your home's market value, it will provide limited benefit in determining your home's replacement cost.  You may request that your bank's appraiser perform the REPLACEMENT COST METHOD, but they may charge a fee for the additional time involved.