Shopping for coverage Insurance

How to determine how much coverage you need
Insurance companies use established formulas to help them decide the appropriate limits of dwelling and structure coverage. These calculations take into consideration the same type of information used in real estate appraisals, such as:

• Construction materials
• Type of floor plan (two-story, split level,ranch, etc.)
• Total square footage
• Number and types of rooms
• Type of garage or carport
• Special features

Your replacement cost of your home may not be similar to your local government’s assessed value for tax purposes or the current market value. They use different criteria to establish those values. Once you establish the appropriate coverage amount for your home, you should review this information annually. This will ensure your coverage maintains pace with inflation and other changes that affect the cost to repair or replace any damage to your home. Most policies automatically adjust your dwelling limit at renewal, so you may want to review it to make sure you have adequate coverage.

Whenever you make changes to your home, such as additions or major improvements, notify your insurance company. This is important — it can affect the amount of coverage you will need to maintain full replacement cost coverage should you have a loss after renovations or improvements. Talk to your agent before you make major improvements or renovations.