TUESDAY, JUNE 29, 2021
In all matters of insurance, once you have the legal or regulatory minimum, the question of how much is enough really comes down to the individual. We can answer that question with another question: Assuming that you are aware of the risks that you are managing as a homeowner, do you feel comfortable with the level of home insurance you have right now? If so, then you have enough. If not, then you don't. That said, there are expert-recommended minimums worth considering:
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$300,000 in Liability - With liability coverage, most insurers will offer a minimum purchase of $100,000 in protection. The commonly recommended minimum is $300,000, while the ideal would be $500,000. Many of the simple repairs around your home can be paid for out of pocket. The real financial danger as a homeowner is in liability. So, the more protection you have, the better.
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Excess Liability - If you own more than just a house — such as a ranch, business properties or farmland — and your ownership value exceeds your home insurance liability policy, it may be a good idea to invest in excess liability or an umbrella plan. This way you ensure that this property does not become a lawsuit target.
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ALE Coverage - ALE stands for Additional Living Expenses. If your home is destroyed in a fire, your policy may cover construction of a new home on your property. But this will leave you without much money to sign a lease on an apartment until construction is completed. ALE may also help you to recover lost rent when you are no longer able to host tenants in your home.
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The Value Of Your Home - It is difficult to get a precise estimate of what it would cost to rebuild your home, but you can get a rough idea by multiplying square footage by building costs per-square-foot in your area. You can determine the local square-foot price by calling nearby realtors, builders associations or your Ahrens Insurance agent.
Once your mortgage is paid off, you're not required to carry home insurance at all. But what you're really buying from your insurance provider is peace of mind. If you have that, then you have enough protection.
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It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional
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