First Person: How Much Home Insurance Do We Need?

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It can be a tough call deciding how much home insurance to maintain on a property, but it can be even harder to know how much personal property coverage to carry on a policy. Having just re-evaluated our own coverage, I realized that we were under-insured and therefore decided to bump up the coverage amount on our policy. This wasn't exactly an easy decision, and I found myself weighing the amount of coverage versus the cost of that coverage and the worth of our personal property. Here is what I considered in the process and what I came up with for our coverage amount.

How Much we Pay and for What Coverage

During my recent review of our insurance coverage, I realized that we only had $25,000 worth of personal property insurance. While this might at first sound like enough, when I started adding up the cost of replacing all the items in our home, it exceeded this number. Since we were only paying about $150 a year for our condo personal property insurance, I felt that looking into bumping up this coverage wouldn't be a bad idea.

Living Location and Situation

Our condo is in a relatively safe location and has security features like locked entry level doors, self-closing condo entry doors, and an intercom system for arriving guests. Our neighbors seem like decent people, plus, as a work-at-home dad, I'm home much of the day, so we feel fairly secure, and theft is not as much a focus in our insurance evaluation. Fire is the main culprit in my planning.

Living in a vintage condo building built in the 1920s, and with a variety of neighbors surrounding us, it only takes one iron left on, a small gas leak, a malfunctioning furnace, or a stove left burning to ignite a situation in which fire, or even just smoke, could destroy many of our possessions and leave us with expensive replacement costs. Bearing this in mind helped push me to reconsider our coverage amount.

Determining Minimum Needs

To figure out what amount of coverage would suffice for our condo contents, but that wouldn't have us paying a significantly higher policy premium each year, I made a general list of contents and associated values before contacting our insurance provider. This helped me determine that doubling our personal property protection would likely suffice if it wasn't too pricey. After a simple five minute call our insurance provider, I found that it would cost us about $40 more a year to double our personal property protection amount, which I though would be worthwhile, so I did it.

Future Insurance Coverage

Knowing the amount necessary to increase our policy coverage will be valuable moving forward as well. With two kids and an increasing amount of clothing, toys, and assorted other family possessions, it's likely that I might be increasing this amount again in the near future. Having a general idea of the costs and the process to do so will be valuable information moving when I eventually decide to do so.

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