Homeowners, both old and new, always have questions about homeowners insurance. While there are a number of questions homeowners may have about homeowners insurance, by far the most frequently asked question is, “How much homeowners insurance do I need?”

The answer to this question isn’t as complex as many people think, it just has to be broken down properly so it is easier to understand. That being said, let’s take a look at the answer to this often asked, yet sometimes not so easily answered question.

Structure of Your Home

You need to calculate how much it would cost to rebuild your home using current construction costs. A couple things to remember:

1. Don’t include cost of land.

2. Don’t base your rebuilding number on the price you paid for your home.

The quickest and easiest way to get an estimate is to take the total square footage of your current home and multiply that by local building costs per square foot. There are of course other factors involved in price (materials, number of rooms, etc.), but this will give you a rough estimate.

Personal Possessions

You can decide if you want to do this based on replacement cost or actual cash value. Replacement cost will replace all your personal possessions without the factor of depreciation. Cash value will give you the cash to buy your items back, but at a depreciated value.

Living Expenses after Disaster

You will have to decide how and where you want to live in the event of a disaster. This section will cover meals and hotel bills.

Your Liability to Others

This area of the homeowners insurance policy will help cover you from liability you may be faced with from others. This will usually cover against lawsuits involving property damage and personal injury due to your disaster.