Considering the Goal of Homeowners Insurance In most cases, the goal of the homeowner is to make sure that they have enough insurance coverage to reimburse them should their home be totally destroyed during an insurable incident.
Being made whole is always preferable to being given half the value of your home-which would mean that you must either supplement your insurance benefit in order to restore your lifestyle or that you must reduce your cost of living.
In addition to receiving the value of your home it's likely that you want to insure the value of your possessions as well so that you are not forced to liquidate retirement and other savings in order to buy furniture, clothing and other personal items.
Lastly, insuring antiques, artwork and other valuables secures your investment in these pieces.
While a sentimental attachment to an object can never be fully reimbursed, the physical value of the item and the money you've invested in it, can.
What Goes Into Being Made "Whole" You might think that being made whole by your insurance company means that you will get the sale value of our home so you can rebuild or buy another, comparable home.
But there are actually many other factors involved in being made whole including: Debris removal: If the insurable incident left debris around your property, this must be cleared before rebuilding can begin.
This is an additional fee that might exceed the value of your home but is necessary to start the process that will make you whole.
Consideration of building codes: Over the years, as building materials change, the required codes for building are upgraded as well.
The inexpensive windows that might once have been acceptable may not be wind resistant enough for your local building codes, so rebuilding your home may carry many costs that exceed the actual value of your former dwelling.
Catastrophe considerations: If a natural disaster is the result of your insurable incident, then it's unlikely that yours is the only home affected.
That means that construction companies will be inundated and may raise prices to keep up with demand.
This increase may even surpass the limits on your policy.
When determining the replacement cost of your home, you will want to keep this in mind.
Determining the Right Amount for you All of this information may do nothing more than make you concerned that you have too little home insurance coverage.
But being intimidated may lead to inaction, which is the most dangerous step you can take.
Instead, create a plan of action for determining a reasonable amount of home insurance for your family.

1. Start by getting a real estate appraisal.
   While this might be expensive, it can give you a very good idea of the value of your home and the limits you should choose.
   
2. Work with your agent: Your insurance agent can give you an idea of the insurance company's replacement cost estimates for your home.
   A program by Marshall & Swift automatically computes data including location and building costs and determines your likely replacement costs.
   This information could change annually so it's important to ask your agent for updates when you renew your policy.
   
3. Survey homebuilders: No one understands current prices for home building quite like those companies that are actually doing it.
   Call your local home builder and explain that you want an estimate so you can get the appropriate insurance coverage.
   They may charge for the estimates.
   

Remember, securing your family's largest and most important investment is your primary goal when buying insurance.
While you may be satisfying the requirements of a lender by taking out a policy, that should not be your only reason for doing so.
Ensure that you and your family will have some financial recourse should you encounter an insurable event should be your top priority.