How Much Home Insurance Do I Need?

By Sudeshna Majumdar | February 18, 2016

How Much Home Insurance Do You Need?

Your home is your ‘safe haven’ and a place where you always feel secure. But it’s equally important to secure your home too. Wondering how you can do that? Well, a Home Insurance policy is all you need to secure your home against most natural calamities and man-made disasters.

But just how much Home Insurance do you actually need for your house? Well, it’s not difficult to determine the amount once you’ve made the correct calculations.

Let’s explain the factors that influence your premium amount and help you choose a Home Insurance policy to secure your house.

Benefits of Home Insurance

A comprehensive Home Insurance policy will offer you the following benefits:

  • Complete protection against financial liabilities arising from any damage/loss to your home or its contents due to natural or man-made calamities
  • The ability to rebuild your property within a short period as most policies offer a quick turnaround time for claim settlements
  • Additional coverage against theft, earthquake, and other emergencies

The biggest benefit, almost needless to say, is the mental peace that you get when you know your house and valuables are completely secured!

Factors influencing Home Insurance

In order to determine how much Home Insurance you will need, you need to consider these factors:

  • Cost of rebuilding your house: How much did you spend while building your house? Consider the number of rooms, bathrooms, type of flooring, garage or extra rooms, alterations done, additional special features like fireplace, and so on. You need to calculate the total amount you spent while building your dream place.
  • Cost of Assets: Most Home Insurance policies will cover 50% to 70% of the assets that you possess. So it’s important that you make a complete list of the furniture, electronic appliances, valuables, furnishings, etc. and the cost of replacing them in case they are damaged or stolen.
  • Cost of alternate accommodation: Your Home Insurance policy will also cover expenses incurred for alternate accommodation in the event that your house is damaged by fire or other disasters covered by insurance. This cover is also applicable in case any part of your house (insured part) is damaged by a tenant – the policy will help you reconstruct that area by paying you the rental amount.
  • Liability to Others: Most policies will also cover any legal liabilities incurred if any third party is physically injured within your premises. The policy will take care of the legal charges you may incur at court.
  • Deductible Amount: You also need to consider the deductible amount when you calculate your Home Insurance amount – the higher the amount of deductible, the lower your insurance premium.

And those are the factors determining your Home Insurance amount. Now that you’re in the know, go ahead and secure your home.

Additional reading: Types of Home Insurance

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