How to Know if You Don’t Have Enough Homeowners Insurance

When it comes to your home, you want to feel completely secure in your protection. You must have coverage that fits your needs, which may take some time spent reviewing your homeowners insurance policy with your agent and doing a little research. It pays to review your coverage at least once a year to ensure your policy meets your evolving needs.

During your next review, keep an eye out for these warning signs that you need to expand your coverage. 

Construction Costs 

Actual cash value coverage reimburses you for the value of your home based on its current condition. For instance, if your home was built 10 years ago, you’d receive only the depreciated value of decade-old windows, cabinets, appliances, and so on.

Most insurers recommend the more comprehensive replacement cost coverage to be reimbursed for the amount it will cost to rebuild your home like new with the same kind and quality of materials. Depreciation doesn’t factor into the settlement equation.

To get the full benefit of replacement coverage, you need to purchase enough insurance to cover the total cost to rebuild your home, excluding the value of the land. Many people make the mistake of insuring at the market value; however, the amount you could sell your home for today isn’t necessarily the same as how much it would cost to rebuild.

Check current construction costs in your local area for guidance. If you’ve purchased a newly constructed home in the past year, you already have the answer. The same is true if you’ve refinanced within the past year. You almost certainly paid for an appraisal during that process that likely includes three valuations: replacement cost, market value, and actual cash value.

If you’re determining replacement cost without those head-starts, ask local homebuilders about the average square-foot construction cost in your area. If the going rate is $175, and your home is 2,000 square feet, you’d purchase $350,000 in coverage. If you spend at least 5% of your home’s value on remodeling —or $5,000, whichever is less—  contact your Glen Rock homeowners insurance provider to check for needed coverage adjustments. 


Be sure you’re also insured at the right value for your home’s contents and for personal liability. Most insurance policies provide only actual cash value on contents. To get replacement cost coverage, you’ll need to purchase an endorsement. If you have valuables not covered by your policy—silverware, jewelry, furs—purchase endorsements for those, too.

Consider if any endorsements  would be beneficial for your home such as: 

  • Extended Replacement Cost Coverage
  • Broadened Theft Protection Coverage
  • Inflation Guard Coverage
  • Expanded Credit Card Theft and Forgery Coverage

Most homeowners forget to factor in the liability coverage limits in their policies. If you have a dinner party and a guest falls down your front steps, you don’t want to be underinsured. A liability claim for bodily injury and property damage is a hefty expense!

If you’re concerned about increasing your premiums by adding an endorsement, ask your Glen Rock homeowners insurance agent how you can keep costs low.

About David G. Sayles Insurance Services

At David G. Sayles Insurance Services, we strive to protect the investments of homeowners like you. Our comprehensive policies are customized for you to provide the exact coverage you need. For more information, contact us today at (800) 439-0292.