It is only sensible to secure any investment that you make, and even more so if it is your home. The best measure you can take to protect your home is to have homeowners insurance. But for how much should you insure your home? Determining exactly how much homeowners insurance you need requires some careful thinking on your part.

Here are a few important points to consider as you go about determining how much homeowners insurance you need, as well as the types of insurance coverage that you should look into.

The cost if you have to rebuild

In determining the amount of coverage you need, the primary factor to consider is replacement cost. How much will be needed if you have to rebuild your home? Home insurance is essentially your protection against losses due to the destruction of your property. So if your home were destroyed, your homeowners insurance should be able to cover the costs of rebuilding it.

One thing you can do is seek the help of local real estate agents to determine the a good estimate of the current value of your property. It's their business to know about property appraisals because they need the skill (and knowledge) when buying and selling homes.

To estimate the value of your home, take into consideration the following facotrs:

• The location of your property
• Description of the immediate vicinity
• The exact floor area of the house
• The type of construction materials used
• The approximate value of your other assets in the property

If possible, obtain a written quotation on the cost of rebuilding your home, as it will support your application of home insurance coverage. You may wish to ask for multiple quotes to protect against your property being undervalued.

Type of insurance coverage you should get

There are several types of homeowners insurance coverage. Some policies provide insurance against specific risks like fire, lightning, hurricane, flooding, break-in and burglary or other man-made damages. You can also get a coverage that insures you in case of any form of peril other than those specifically excluded in your policy.

Another decision factor in choosing your homeowners insurance coverage is the valuation at the time of loss. You could get a policy with a specific dollar value for your home. Note that your coverage is limited to the cap set by your policy and does not take into account any increase in home value. Your other choice is the more expensive policy that guarantees the replacement of your home regardless of value at the time of loss.

Inclusion of valuable personal possessions

Be sure to include your valuable possessions like jewelry, antiques, art collections, heirlooms, and other important items in your home insurance coverage. Insurance companies often limit the amount of coverage for personal assets. Be sure to know and understand the different provisions and limitations of your home insurance policy. Review the policy carefully, particularly the fine print, before affixing your signature.

In addition, consider taking pictures or videos of the personal assets you are including in your insurance coverage. They will serve as supporting documents to the list of insured items included in your policy. They may come handy if you have to deal with a challenged claim.

Needless to say, homeowners insurance can help you rebuild even after a devastating loss. But the very first step is choosing the right type of coverage and determining exactly how much coverage you need. If you do your homework early, you should find yourself well-prepared when it comes time to file a homeowners insurance claim.

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