As with any insurance coverage, home insurance policies have multiple options that you can choose from to match your financial situation. You want to make sure you have adequate limits to fully cover anything you can't.
You usually don't get to choose the limits for repairing or replacing your home. Your insurance company sets those based on their appraisal of your home. Yet, there are still a few things you should keep in mind.
Your personal property coverage usually has set limits that you want to match to the value of your belongings. If you file a claim, you'll need to provide receipts or other proof of the value of your possessions. So, you don't want to overestimate this coverage and pay more for nothing. You also don't want to be under insured.
Keep in mind that certain items — such as cash, jewelry, and electronics — might have separate limits or be excluded from your general property coverage. You'd need separate or additional coverage for those items.
Your liability coverage protects you from losing your home or other assets in a lawsuit. Therefore, you may want your total liability coverage to equal at least your current net worth.
You can achieve this through a mix of umbrella insurance and the liability protection included in your home insurance policy.
View Also: Condo Insurance, Renters Insurance
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