Is this coverage too high? It seems a bit excessive for Central IL. Here’s the breakdown:
- Liability (Personal and Property): $1 million
- Medical Payments: $25k/$125k (seems low)
- Dwelling: $785,804 (extended replacement cost)
- Personal Property: $589,353 (replacement cost)
- Additional Living Expenses and Fair Rental Value: $157,161
- Sump Pump Failure/Backup of Sewer or Drain: $30k (unfinished basement for now; I’ll increase this when I remodel)
- Auxiliary Private Structures: $78,580 (extended replacement cost; garage is old and will be rebuilt, and this figure will be updated accordingly)
Coverage is for all perils, code 1.
The house is 102 years old, made of all brick, with lots of original woodwork. Its fair market value is likely around $270k as-is, but could reach about $400k after updates. The home is classified in a way (possibly Q code) that reflects its historical value. The minimum for personal property is 40%, totaling over $300k, which is way more than I actually need. I estimated my belongings to be about $50k, and I was being generous; even $100k seems like more than enough.
What are your thoughts?
It sounds like you’ve put a lot of thought into the coverage you currently have, and it’s great that you’re considering whether it’s appropriate for your situation. Here are some things to keep in mind regarding your coverage:
Liability Coverage: A $1 million liability limit is generally considered a good standard, especially if you entertain guests or have a lot of visitors. However, you could evaluate whether you need that level of coverage based on your assets and lifestyle.
Medical Payments: $25k/$125k for medical payments is on the lower end, but it can be sufficient unless you anticipate heavy traffic in and out of your home or have specific concerns (e.g., children, pets).
Dwelling Replacement Cost: The extended replacement cost of $785,804 seems high given the fair market value of your home. You may want to reassess that figure, especially if you’re more comfortable with a value closer to $400k after renovations.
Personal Property: If you’ve estimated your personal belongings at around $50k, then a minimum of $589,353 definitely seems excessive. You might want to adjust this down to a more realistic figure that aligns with your actual possessions.
Additional Living Expenses: The $157,161 for additional living expenses seems reasonable, but consider whether that amount reflects your expected expenses in case you need to relocate temporarily due to damage.
Sump Pump Coverage: It’s a smart move to consider coverage for sump pump failure, especially if you’re planning to remodel the basement in the future.
Auxiliary Structures: If the garage is old and in need of rebuilding, it makes sense to want to increase this value later on. You might also consider whether it is worth its current insured amount.
Ultimately, while having adequate coverage is important, over-insuring can lead to unnecessarily high premiums. It might be worthwhile to consult with an insurance agent who can help you find the right balance for your needs based on your home’s value, your belongings, and your specific situation. Adjustments based on your updates and needs could help streamline your coverage and save you money in the long run.