We only owe 66,000 on our home, so how much insurance are we required to carry?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Sep 23, 2014

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Insurance Question from Bradenton, FL

Asked on 09/23/2014

We only owe 66,000 on our home, so how much insurance are we required to carry? NULL

Answer given on October 13, 2014

The amount that is owed on a mortgage on your home has no effect on the amount of insurance that should be carried on the homeowner insurance policy.The homeowner policy coverage amount is based on the replacement cost of the home, not the value of the loan. Your insurance company or agent will determine the cost to replace the home based on local building costs or by using a formulary for building costs as determined by the insurance company.You can affect the costs of this insurance by having a higher deductible or by adding discounts that you are eligible for such as a monitored alarm system, choosing to not purchase hurricane insurance, bundling it with your auto insurance or other such discounts. Check with multiple insurance companies for quotes for the insurance. The companies may have different values for your home, but don’t automatically choose the lowest amount of insurance, as you may not have enough insurance to repair or rebuild your home in the event of a major loss. Have the agent or insurance company explain the insurance coverage and how it will work for you.

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