Exactly how we build out Home Insurance for our clients
Insurance quotes are full of coverages, limits, and numbers that all sound important, but most people have no real way to know which ones actually matter for their home. That’s exactly the gap we try to close with our clients. So instead of just listing out every coverage that exists, here’s where we actually land when we’re building a policy for the people we work with, the baseline we start from. If you’d like that list of all coverages, check out the BASICS and OPTIONAL coverages in our blogs.
Our Baseline
Dwelling, calculated properly. This one is important – Don’t guess at your Dwelling limit… and don’t rely on what you paid for the house. Ideally, a replacement cost estimating tool will help determine this number, since rebuild cost depends heavily on your specific location and the quality of your home’s construction and finishes – these aren’t easy to find without paying, but your insurance agent and company has a solid version that’s intended on calculating rebuild and debris removal specifically for when there’s damages insurance would respond to.
As an absolute floor, we don’t like to see this fall below $200 per square foot of finished living space regardless of where a home is located, but location can easily push that number to double or more depending on your market. That said, treat $200 as the minimum you’d expect to see, not a solid solution. This is one to have your agent recalculate periodically, not just set once at purchase – don’t set it and forget it.
Deductible: take the highest one you can actually afford, with a limit. Here’s how we think about it. Take the premium savings from raising your deductible, and figure out how long it would take you to save that same dollar difference on your own. If it takes 5 to 10 years to bank the difference between your old and new deductible, it’s usually worth it. Less than 5 years, even better. Past 10 years, the savings probably aren’t worth the added exposure.
Example: say raising your deductible from $1,000 to $2,500 saves you $200 a year in premium. That $1,500 difference takes 7.5 years to save on your own, right in the sweet spot. Take the higher deductible, bank the savings, and self-insure the smaller stuff.
That last part matters beyond the math. Filing claims raises your cost going forward, so reserving your insurance for the losses you genuinely can’t absorb, and paying out of pocket for the smaller repairs, protects your record and keeps your premium lower long-term. It’s not a myth.
Personal Property. We don’t spend much time scrutinizing this one. Most policies come with more than enough automatically to cover a typical household’s belongings, so it’s rarely where we focus attention when reviewing a quote, but take a look over the number, add up all the things you own (it’s the small stuff that adds up much faster than you might think) and make sure you’re VERY comfortable here.
Loss of Use, enough for 12 months. Make sure this limit covers a full year of rental housing plus increased costs, not just a few months. Rebuilding a home can take longer than you might expect, and running out of Loss of Use coverage partway through is not where you want to find that out.
Personal Liability at $500,000. This is one of the cheapest upgrades on your entire policy, and the jump in protection from the state minimum to $500,000 is significant. There’s very little reason not to be here.
Medical Payments at $5,000 or higher. Same logic. Inexpensive to raise, and it’s the coverage that lets you help someone quickly without a fault fight.
Extended Replacement Cost, no less than 25%. If your insurance company offers a higher percentage at a low added cost, take it. This is your buffer if your Dwelling number ends up short when it actually matters. We often go for 50% and sometimes even Guaranteed Replacement, when it makes sense.
Ordinance or Law, no less than 10%. Yes, even on newer homes. People assume this only matters on homes 50-plus years old, but code requirements change often enough that even a home built 15 or 20 years ago can trigger unexpected rebuild requirements.
Personal Property Replacement Cost. This one isn’t always automatic. Just make sure it’s on the policy.
Water Backup, no less than $25,000. Buy as much as you can comfortably afford here. This is one of the more common claims we see, and repair costs (not to mention the clean up) from a backup event add up fast.
Worth a Look Beyond That
Increased jewelry or valuables coverage. Standard personal property comes with special limits, sub-caps on categories like jewelry, firearms, and other collectibles or antiques, that are usually far below what those items are actually worth. This is where we often bump up a special limit or schedule an item individually, especially for jewelry, firearms, and antiques or collectibles.
Underground Service Line Coverage. The lines running to your home (think water, sewer, gas, etc.) aren’t covered under Dwelling, and repair costs here aren’t small.
Equipment Breakdown. Sudden mechanical or electrical failure on major systems is common enough, and inexpensive enough to add, a definite nice-to-have.
Don’t Overlook Bundles
Most companies offer set bundle tiers that pack several optional coverages together, and it’s genuinely one of the better ways to get more coverage for your dollar. Some of what’s listed above can come included in a bundle, along with a number of other worthwhile add-ons we haven’t covered here. Worth a look over what’s actually in each tier and weighing the added cost against what you’d pay to add those coverages individually.
The Bottom Line
It’s important to know that every situation is different, and there are plenty of other optional coverages worth a look depending on yours (you can see the full list [here]). The best next step is a conversation with one of our agents, so we can make sure nothing about your specific situation gets missed.