How much home insurance do you need?

My home is in Pittsburgh and it's 2,000 square feet. It was appraised at $250,000. How much home insurance do I need to purchase? My mortgage company wasn't very clear on the amount.

Answer
“Home insurance can be confusing, so understandably, most people need guidance! If your mortgage company isn’t providing clarification, you can look at several calculations that go into home insurance coverage.
The first is the replacement cost of your dwelling. This amount is determined by the square footage of your home multiplied by the rebuild cost of a home in your area. Most areas’ rebuild costs are between $100-$200, but some can be as high as $500-$600. You can search online for the average rebuild cost of your area or ask your appraiser.
If the average build cost in your area is $112, you would multiply that by 2,000. This gives you a total of $224,000, meaning you’d need as least that much in coverage. If you choose to carry less than that, your insurance company could deny coverage. This is because insurance companies typically require the homeowners’ coverage to cover at least 80% of the home’s total replacement value.
Once you have your replacement cost figured out, you’ll also need to look at personal property and liability insurance. For personal property insurance, you want to be sure you have coverage for the total value of all of your belongings.
For liability insurance, you’ll want as much as you can afford. This is similar to recommendations for liability car insurance as it protects other people if they’re hurt or injured.
If you’re still unsure about coverage, reach out to insurance companies. Agents can help you figure out the amount of insurance you need based on your home. Your mortgage company will let you know about any issues once they review your insurance coverage before closing.
And since you’re poring over home insurance quotes, you may as well do the same for your car insurance. Use the Jerry app to compare rates in minutes. You may even find a company that’s willing to bundle home and auto for even more savings.”
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Emily Maracle
Answered on Sep 09, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.
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