Policy Requirements – How Much Insurance Am I Required To Have?
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UPDATED: Jul 16, 2021
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Most insurance companies require homeowners to have at least 80% of the actual value of your home (excluding the value of the land) in order to pay a claim in the event of a total loss. This is often referred to as “coinsurance.” The results can come as a real surprise to a homeowner in the event of a loss. For example, consider a homeowner who has an older home that is insured for $60,000. Due to appreciation of home values, the home is now actually worth $100,000 — which means the insurance company would today require the homeowner to carry at least $80,000 of coverage. Since the homeowner carried only $60,000 (60% of the home value), the insurance company may only provide 60% of the loss – a claim for $20,000 may result in payment of only $12,000.