Is this insurance coverage excessive? It seems a bit steep for Central Illinois. Here’s a breakdown of the coverage:
- Liability (Personal and Property): $1 million
- Medical Payments: $25k / $125k (feels low)
- Dwelling Coverage: $785,804 with extended replacement cost
- Personal Property Coverage: $589,353 with replacement cost
- Additional Living Expenses and Fair Rental Value: $157,161
- Sump Pump Failure/Back-Up of Sewer or Drain: $30k (currently for an unfinished basement; I plan to increase this once I start remodeling)
- Auxiliary Private Structures: $78,580 with extended replacement cost (the garage is quite old and will need rebuilding; I’ll adjust this when that happens)
Coverage is under “All Peril Code 1.”
For context, the house is 102 years old, all brick, and features extensive woodwork. Its fair market value, as is, is generally around $270k, but could rise to about $400k with renovations. I understand it is classified in a way (possibly Q code?) that reflects its age.
The personal property minimum is set at 40%, putting it over $300k, which feels way too high for me. After assessing my belongings, I estimate their total value at about $50k, and even that is generous. I believe $100k would be more than sufficient.
What do you think?
It sounds like you’ve done a thorough job of evaluating your insurance coverage, and it’s clear that you’re trying to find the right balance between adequate protection and not overpaying. Here are some thoughts on the various components of your coverage:
Liability Coverage: $1 million in liability coverage is generally considered a strong amount, especially if you have assets to protect. It can help cover legal fees and damages in case of lawsuits. If you don’t have many assets yet and don’t anticipate significant risk, you might consider lowering this amount.
Medical Payments: The $25k/$125k for medical payments does seem on the lower side, especially if you host guests often or have children. Medical payments coverage can be helpful for covering minor injuries without the need for liability claims. You might want to consider increasing this to provide better coverage for potential accidents.
Dwelling Coverage: The extended replacement cost of $785,804 seems substantially higher than your property’s fair market value of $270k. However, if your 102-year-old home has unique features and historical value that might not be reflected in the market price, then it could warrant this higher coverage. Make sure to periodically review replacement costs with your insurer to ensure you stay aligned with current construction costs.
Personal Property Coverage: Your estimate of $50k for belongings seems reasonable, considering your generous assessment. You might want to provide a detailed inventory and consider lowering this coverage to better match your true needs, especially since the minimum is set at 40% of dwelling coverage, which indeed can lead to higher costs.
Additional Living Expenses and Fair Rental Value: $157,161 seems appropriate if you consider the potential costs of living elsewhere while your home is being repaired or rebuilt, but assess whether you would really need that much coverage based on your financial situation and income.
Sump Pump and Auxiliary Structures: Adding coverage for these sections based on your current plans makes sense, and you can adjust them as needed when those projects come to fruition.
In summary, while it’s important to have comprehensive coverage, it’s equally crucial to ensure it aligns with your actual needs and financial situation. You may want to consult with your insurance agent to discuss your concerns, particularly around the dwelling and personal property values, to potentially adjust your policy accordingly and save you some money.