How can I determine how much Homeowners Insurance coverage I need?
Calculate how much it will cost to replace your home if it were totally destroyed. Your agent can help in determining this figure. In fact, most insurance companies make a physical inspection of your home when they first insure it. Using formulas that take into account whether your home construction, total area, number of rooms, etc., the company calculates your replacement cost.
Next, determine the value of your personal property. To properly make a determination, you must list every piece of furniture and fixture within your home. Some insurance companies provide household inventory schedules to help you.
As you compile your inventory you should supplement it with receipts indicating the purchase price and date of purchase and photographs of major items. Your inventory should be updated on an annual basis, or at the very least, whenever you purchase a large appliance or piece of furniture.
Some people periodically videotape all their possessions. If you videotape, make sure all the drawers and/or doors of your furniture are open so you have a record of what is stored. You may also want to verbally describe major items. Store the videotape in a safe place away from your home.
Homeowners Insurance Coverage - How Much Insurance Do You Need?
Comprehensive information about determining homeowners insurance coverage from the Insurance Department's Homeowners Insurance Resource Center