Choosing Coverage Limits For Your Homeowners Insurance

You know more about your home and assets than anyone else — and a Farmers® agent can help as you use those insights to select coverage limits for your policy.

Here are some items for you to consider:

Estimate the cost of rebuilding your home

You may want to start by obtaining an estimate of your home’s replacement cost. This isn’t the price you paid for your house or the size of your mortgage, and it won’t include the value of land. Rather, the estimated cost of rebuilding your structure will help you choose the coverage limit you want.

Keep these variables in mind:

  • Your home’s age. Modern building codes can increase the cost of rebuilding an older house.
  • Local construction costs. Prices for labor and materials can vary from region to region. Talk to reputable contractors to learn about the cost of rebuilding a home like yours in your area. Your Farmers agent can also help by running a home replacement cost estimator.

Estimate the value of new and unique features in your home

Have you renovated your home? Maybe you remodeled your kitchen or bathroom, or added expensive materials like a marble floor or custom woodwork. Include the value of any upgrades in your estimate, since it may cost more to replace or rebuild unique features with new materials or specialized labor.

Estimate the value of your personal belongings

Your homeowners policy will cover the cost of replacing personal property that’s stolen, damaged or ruined if replacement cost coverage is purchased — up to policy limits. Taking a complete inventory of your possessions and their value can help you choose the coverage you want, speed up the claims process and verify losses if needed for tax purposes.

  • Walk around your house, going room to room and making a list of everything you own — furniture, electronics, appliances, tools and so forth. Be sure to record everyday items, too, like clothing, linens, dishes and athletic equipment. And don’t forget about any items you’ve stored away.
  • Include as many details as you can, including descriptions, serial numbers and purchase dates.
  • Document everything with photos or videos.
  • Keep your household inventory in a safe place, like a fireproof safe, safe deposit box, with a trusted friend, or online in digital cloud storage.
  • Update your personal property inventory whenever you make a new acquisition.

Consider using a home inventory app that helps you organize, update and save your household inventory.

Estimate the value of prized possessions

A basic homeowners policy might cover items like jewelry and fine art — but only up to a fixed amount. It isn’t likely to cover the full value of a $10,000 ring or a $7,000 painting. Identify these items and ask your Farmers agent about personal articles floaters. These can increase coverage limits and may provide comprehensive coverage, but may require additional documentation.

Estimate desired liability coverage for your assets

The more assets you have, the more vulnerable they become if someone sues you. To determine your liability limits, it’s important to consider your net worth and how much protection you want.

You might also consider a personal umbrella* policy that can extend your liability coverage beyond the maximum provided by your underlying policies (auto, home, motorcycle, boat, etc.) up to as much as $10 million**.

*Some optional coverages are not available in every state.

** Excess liability coverage for UM/UIM is available up to $1M only.

Estimate additional living expenses

Consider how much extra it might cost to live elsewhere while your home is repaired or rebuilt — this expense is often overlooked when people choose their homeowners coverage.

Doug Levy, an emergency communications consultant in Corte Madera, California, has moved 17 times in 18 years.

He and other frequent movers break down month-to-month steps they recommend for planning a big move. Read the story: Moving? These Tips from Serial Movers Can Help Make Packing up Your Home Easier

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