Whether or not you own your house outright or you have a remaining mortgage balance to pay, it is important to have adequate home insurance to cover your property. For most people, their home is the most valuable thing that they own, and insuring it properly is a very wise way to use their money. For the cost of home insurance, you get substantial peace of mind and huge asset protection. One of the difficulties that people have when they go to purchase home insurance is how to determine the level of coverage that suits their situation.

Here is What you Need to Cover
You should have the amount of home insurance cover the entire value of the building or house that you own. It is widely agreed by insurance professionals and mortgage companies alike that the home insurance should cover the entire cost of replacement of the structure. This means you should have enough coverage to rebuild your house, and you don’t need to worry about the value of the land. No matter what happens, the land will be there but many things can happen that will cause your home to have to be completely rebuilt. You can choose to cover your home for less, and in fact you can save some money on your premiums by doing this. For instance, you can choose to insure 80% of the replacement value of your home. This can be a risky proposition, as you can imagine. Take a moment to calculate approximately what it would cost to rebuild your home. Now calculate what 20% of that would be. That would be your out-of-pocket cost if you chose to go with 80%. For the few extra dollars a month it is best to have full coverage.

You should also cover the value of the full contents of your home. Under personal property coverage you would be reimbursed for the value of all of your personal possessions. This would include things like your jewelry, art, electronics and all of the furniture and appliances that you own. Not all of these plans are worded or set up the same, so it is advisable to go through the fine print of the insurance contract at the beginning and be sure that you know what is included. Sometimes there is a limit on this value, which is a maximum amount that you can claim under this policy provision. If you are going to insure all of the contents of your home, it is important to have proof of what you have. Imagine that the insurance company will not want to give you whatever you ask for, and even when you can list everything in the home there may be discrepancies. It is a wise idea if you have a video camera to take an hour or so and go through the home filming everything. Have someone go around with you, opening drawers and making sure that every inch of the home is on video. It might seem like overkill, but if something ever does happen you will be very glad that you did this. It may mean thousands of dollars in additional claims and much less hassle. If you do this, make sure the copy of the tape is stored somewhere else and is safe.

Additionally, make sure that your policy covers the cost of living somewhere else while the home is rebuilt, and liability coverage in case someone is hurt in your home. A good insurance professional can set you up with coverage that can keep your biggest asset safe.