How much insurance do I actually need for my home?

Services for Real Estate Pros Insurance NPN # 13379201

Your home is probably your largest single investment, so insuring it adequately is very important.
It is estimated that about 60 percent of American homes are underinsured by an average of 22 percent.
You should have an amount of insurance that is sufficient to rebuild your home in the event it is totally destroyed by a fire, tornado, hurricane or other insured catastrophe.

 The amount of insurance should cover the cost of rebuilding your home at current construction costs, not including the value of the land.

Don’t think about the price you paid for your home or the appraised value.

There are other considerations to take into account when determining the amount to insure your home for, such as

  • The expense of clearing debris from the lot before rebuilding can begin
  • Fees for an architect or other design professional to estimate costs and produce plans to be followed by the contractor
  • Rapid inflation in the cost of building materials and labor following a major catastrophe that affects a number of homes in the same area
  • Local building codes that require replacement with additional features or more expensive materials

There are several methods used to estimate the replacement cost of a home. Some of the factors insurance companies use are:

  • Building materials
  • Type of foundation
  • Attached or detached garages
  • Square footage
  • Location of the home
  • Fireplace
  • Upgrades
  • Number of rooms and baths


Ultimately it is your responsibility to establish the value of your property and select the amount of insurance for your policy.

We can help with that decision and explain what you can do to avoid an unpleasant surprise after a loss.


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Comments (16)

Michele Cadogan 917-861-9166
Fillmore Real Estate 2990 Av U, Bklyn , NY 11229 - Brooklyn, NY
Licensed Real Estate Associate Broker -

Thanks for sharing this post in helping homeowners determine how much insurance they need.  I've bookmarked it to share with my past and current clients. 

Jan 23, 2013 12:46 AM
Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living
Frank, great insight into what it really means to deal with the aftermath of an insurable loss. Most homeowners don't thing about all these details and only look at appraised or assessed value of their home which may have decreased over the last years.
Jan 23, 2013 01:09 AM
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Another great post!!! I just passed your name and number on to a new homeowner who is in the process of getting quotes. Hope she calls you!

Jan 23, 2013 04:56 AM
Frank Laisch
Orlando, FL
"The Insurance Guy"

Michelle, Thank you. Insurance is one of those things you don't think about until you need it

Silvia, you are so right. I hear from short sale buyers stating they bought it for X, but don't want to insure it for Y.. They forget they are getting it at a discount rate on the short sale & it will cost more to rebuild it

Barbara-Jo, Thank you for the kind words. I will keep you posted on your referral

Jan 23, 2013 07:15 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Frank excellent blog and it should be featured so that more member will notice it.

Jan 23, 2013 09:03 AM
David Cole
David Cole CPA - Orlando, FL
David Cole CPA

Frank, Insurance is like Taxes, many know what it is and have to deal with it, but most do not understand how is is computed

Jan 23, 2013 09:12 AM
Frank Laisch
Orlando, FL
"The Insurance Guy"

George, Thank you. We try to get as much insurance info out there to help buyers and Real estate Professionals understand the market, trends and Insurance as a whole.

David, I agree. most just want to know that they have it and how much it is.

Jan 23, 2013 08:26 PM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Great information, suggested your post. I can certainly understand why you are successful at what you do!

Jan 23, 2013 09:05 PM
Frank Laisch
Orlando, FL
"The Insurance Guy"
Thanks Joe! We do our best to educate, shop, and find the best prices & the best coverages for your customers. because at the end of the day it is about them
Jan 23, 2013 09:30 PM
Linda Holloway
Keller Williams Realty Tampa Central - Tampa, FL
REALTOR®, Your Next Home in Tampa Bay Starts Here!

Hi Frank, This is excellent information to share!  Many people do think about what they paid for the home or the appraised value instead of the replacement cost.  Great tips!  Thank you!

Jan 23, 2013 11:47 PM
Toni Weidman
Sailwinds Realty - Trinity, FL
20+ Years Selling Homes in New Port Richey, FL

Frank - a lot of people here don't bother carrying insurance if they don't have loans; I'm always trying to explain the first thing that you listed--about cleaning up debris if we have a major storm.  Some folks get it; some don't. Great post. Suggested.

Jan 24, 2013 03:26 AM
Amy Stockman
Lakeridge Land Suveying & Mapping, LLC - Winter Garden, FL
Lakeridge Surveying
Frank, this is a great explanation on insurance and coverage amounts. Definitely good to know
Jan 24, 2013 03:38 AM
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

This one has been reblogged on my site as well, Frank.

Jan 24, 2013 04:59 AM
Frank Laisch
Orlando, FL
"The Insurance Guy"

Linda, Yes, The replacement cost is always something the insurance carriers look at.

Toni, Thank you, debris laying around the house is a threat to all. The carriers do "Drive-By" inspections throughout the year an notify the homeowners to clean, trim trees, or other things the can be dangerous effects to a home

Amy, Thanks for stopping by, there is always something to learn on AR

Barbara-jo, Thank you for re-blogging this, I appreciate you spreading the word on insurance coverage

Jan 24, 2013 07:44 PM
Jenniffer Lee
RE/MAX Complete Solutions - Boca Raton, FL
Broker/Owner/Realtor at RE/MAX Complete Solutions

Great info, Frank! Thank you so much for sharing it!

Jan 24, 2013 08:31 PM
Marshall Enterprises
Marshall Enterprises - Saint Michael, MN
Antiques, Lawn Care, and Trashouts

This is important information for homeowners.  Thanks so much!

Jan 28, 2013 05:33 AM

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