Policy Insight: How Much Home Insurance Do You Really Need?

When it comes to insuring your home, there’s one question we hear again and again: “How much coverage do I actually need?” And we get it, property insurance isn’t exactly a thrilling read on a Saturday morning. But get this wrong, and a burst pipe or wind-damaged roof can turn into a much bigger financial headache.

Here’s the good news: determining the right amount of coverage doesn’t have to be a guessing game. Let’s break it down.

 

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🔍 Start with Your Home’s Replacement Cost — Not Market Value

Pro tip: Your insurance should cover what it would cost to rebuild your home from the ground up — not what you paid for it or what Zillow says it's worth today.

Market value includes the price of land and fluctuates with the real estate market. But insurance carriers only pay to rebuild structures, not to rebuy the dirt it sits on. Ask a local contractor for an estimate, or use a cost estimator (your insurer might even provide one).

👉 Look for: "replacement cost coverage" on your policy — this helps ensure you won’t be left short.

 

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🛋️ Don’t Forget Your Belongings

Think furniture, electronics, appliances, clothes, even that mountain of Legos. Most policies offer personal property coverage at around 50–70% of your dwelling coverage, but that might not be enough if you have high-value items.

Tip: Walk through your home with your phone and record everything. A video inventory helps a lot during a claim — and yes, it counts as evidence.

 

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💼 Liability Coverage — For Life’s “Oops” Moments

If someone slips on your icy steps or your dog mistakes a delivery guy for a chew toy, liability coverage has your back. Standard policies usually offer $100,000–$300,000, but higher limits are smart if you have assets worth protecting.

Pro tip: Consider an umbrella policy if you want even broader liability protection.

 

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🛏️ Loss of Use Coverage — Where Will You Sleep?

If your home becomes unlivable during repairs, this covers hotel stays, meals, and even laundromat runs. It’s called Additional Living Expenses (ALE) or Loss of Use coverage.

Make sure the limit is enough to cover a few months of alternate housing — especially if you’re in a high-cost area.

 

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🌪️ Know the Risks in Your Area

Floods, earthquakes, hurricanes — oh my. Standard homeowners policies don’t cover every natural disaster. Depending on where you live, you might need additional policies or endorsements.

Tip: Review your local hazard risks annually. If you’ve added a pool, finished a basement, or installed solar panels, your risk profile — and your insurance needs — might have changed.

 

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📝 Final Thoughts: Review and Adjust Annually

Homeowners insurance isn’t a “set it and forget it” kind of deal. Renovations, inflation, and rising labor/material costs can leave you underinsured before you know it.

Checklist for your annual review:

• ✅ Have I made home improvements?
  
  

• ✅ Has the cost to rebuild increased?
  
  

• ✅ Did I buy new furniture or expensive gear?
  
  

• ✅ Am I covered for local risks?
  
  

 

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🚤 A Tug from Tugboat: When in Doubt, Get a Second Opinion

Understanding your coverage is one thing — navigating a claim is another. At Tugboat Claims, we help homeowners stay afloat during the most stressful times. We’re not here to sell policies, but we are here to help you understand what yours really covers (and what it doesn’t).

Need help interpreting your coverage or filing a claim? Reach out — no pressure, just real talk.

Disclaimer:

Tugboat provides guidance and support but does not operate as a licensed public adjuster or attorney. Tugboat does not negotiate or adjust claims on your behalf. The information provided is intended to empower you in managing your own claim, but it is fully your responsibility to pursue and handle the claim. Tugboat is not responsible for claim outcomes. Any tools and resources provided are based on the information you provide, which may be incorrect or incomplete.

Need expert guidance on a homeowner’s insurance claim? Tugboat Claims is here to help!