Policy Requirements – How Much Insurance Am I Required To Have?
Free Insurance Quote Comparison
Secured with SHA-256 Encryption
|
Written by
Jeffrey Johnson
|
UPDATED: Jul 16, 2021
It’s all about you. We want to help you make the right legal decisions.
We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.
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.