What is the right amount of home insurance you should have?
The amount of insurance coverage is based on reconstruction costs, not the price you could get for selling your property. Below are a few guidelines that should help you decide what is a sufficient amount of coverage.
There is no “average” amount of home insurance that a home should have, because each situation is unique and the right amount of insurance has many different factors determining reconstruction costs.
A common method of calculating the amount of coverage is to multiply the square footage of your home by a replacement cost per square foot value.
Most homes fall into the range of $75 per square foot on the low end to $300 per square foot and even more. Where you live will depend heavily on where your home falls on this rough scale.
There are many different factors that go into determining what the replacement cost value of your home should be. Each company has its own unique formula for determining this.
To get a rough idea, however, you should evaluate your property on the following criteria: