Dear PoP – How Do You Decide How Much Home Insurance to Buy?

Photo by PoPville flickr user ekelly80

“Dear PoP,

1. How do you calculate how much home insurance you need?
2. What clauses should you make sure are included in your home insurance?
3. Which insurance company is the best in terms of responsiveness and handling claims?
4. What should be ideal amount for the deductible?
5. Which agent or company do you get your insurance through?”

Obviously the answers will not be the same for everyone but how did you decide on these questions for your own home?

24 Comment

  • I wish you required reader submitted questions to include their age… while nothing wrong with the “The only bad question is the one you never ask” road…
    1. Depends on what you have in your home, at a minimum enough to replace what you have.
    2. Depends what you have, there are no minimum liability requirements like auto
    3. Subjective – but google will answer
    4. Depends on preference but the higher the deductible the lower the premium…
    5. State Farm

  • I highly recommend Amica for home (and renter’s) insurance. Prices are good, customer service is local, policyholders receive “dividends” at the end of the year, and when I had a claim it was handled very quickly and professionally, and best of all, they paid up! What more could I ask for.

    • I second that. Amica is hands-down the best. The dividend plan is optional. I chose not to have it because it is more expensive. They are known for their no-hassle policy on claims. You should know up front that they are much more thorough in their evaluation process and will ask for a lot of information from you before they will insure you.

  • ah

    Most insurance companies will tell you what you need. They will not let you buy too much insurance on a house because that creates “moral hazard” — i.e., you would come out ahead if your house burns down.

    Basically what you want is enough money to rebuild the house if it burns down entirely and to replace all your stuff. Of course, neither is a perfectly knowable figure, but insurance cos. have good ideas how much it costs to build.

    I personally think a high deductible is the way to go. The problem today is that if you make a claim or two insurance companies jack your rates or cancel you altogether. So it’s just not worth making a claim for $2000 (with a $500 deductible) because you got an ice dam. What you really want is protection against a major disaster–fire or a huge tree destroying your house or something. At that point a $5000 deductible is a rounding error.

    • Was going to write the same thing about the deductible, but ah was quicker. Exactly right — you never want to file small claims so $5000 is about right.

  • My insurance agent told me what the replacement cost for my house is. I double checked using this calculator. You need enough coverage to rebuild your house in the event of a disaster.

    Your deductible should be fairly high. You want to avoid using your homeowner’s insurance if it is at all possible. Unless there’s a catastrophe, don’t make a claim. There’s no sense in paying for a lower deductible for insurance you’re not likely to use. My deductible is $1000, and I’ve considered raising it to $2000. Just make sure you have ready cash above the amount of your deductible.

    I use State Farm, too. I pay about $650 a year.

  • State Farm.

    I use Jimmy Podooley. Have had nothing but great experience with them… with the exception of car rates going up year after year due to DC being a bastion for crappy drivers.

  • I have Liberty Mutual home and auto insurance. For the home, I pay $549 for a year. They asked me a series of questions and then determined how much it would cost to replace my house and other structures. Make sure you ask for discounts (ie: deadbolts, alarm system, fire extinguishers, sprinklers, credit union/alumni membership, etc.).

  • I have Amica. They had good prices and great cutomer service. (But I did not switch my car insurance because they were much more expensive than Progressive.)

    I believe the mortgage company required me to insure my house for at least the appraised value of the property minus the value of the land. (No need to insure the land because it isn’t going anywhere.) I added a bit extra on to that amount just to make myself sleep easier at night.

    Put the deductible as high as you are comfortable with. If you aren’t going to mess with your insurance for damage of less than $2000, then set it at $2000.

    • That’s funny. I did the exact same thing with Amica – took the home but passed on the auto in favor of Progressive.

  • It also depends on whether you live in a condo. Since our condo master insurance policy covers damage to the ‘common elements’ which includes the roof, etc, I do have a $500 deductible since the likelihood of having a huge claim on my person insurance is small. I mostly wanted replacement for damaged stuff and coverage for things like water damage.

    If you have a single family home and are responsible for your roof or a large basement that could flood, you may want to consider the deductible advice in other comments.

  • I may be biased because we had a broken pipe/large leak issue shortly after closing on our house that was in the $8000+ range (re-routing bad plumbing, replacing hardwoods, soaked walls, etc.). Was glad I had a $500 deductible then, but will probably change it in the future.

    For companies, USAA all the way if that is an option for you. I have *never* had a bad experience with them in 15+ years and the rates are on the low side. They’ve made suggestions out of the blue that I know cost them a little more money in the long run but we just the right thing to do (I didn’t know the right questions to ask, so they asked them for me). Their CSRs are among the best in the business.

  • The amount doesn’t matter if your company low balls your claim and refuses to offer an objective cost to rebuild/repair.

    You want a smaller company that is accustomed to older homes. The largest companies have the lowest rated claims service. Completely lost my house and every personal thing I owned in a house fire 3 years ago. Allstate offered 1/3 the cost to rebuild according to avg quote fron 3 NARI contractor firms. We had to file a lawsuit and hire a public adjuster just to get close to the cost. 2 years and $1,000’s of out pocket costs later, we moved back into our house. At the time of our suit, someone published a trial guide on how to sue allstate. Keep in mind that your agent does not service your claim. My claim ended up being 650,000+ after lawsuits, etc.

    DC DOES NOT have a bad faith insurance law so there is almost NO recourse unless they break your contract some how. The DC insurance commission is a shill for the industry so if you have problems, there not gonna do anything for you.

    Coincidentally, most of the companies sued from Katrina and the FL hurricane are the WORST.

    I hear great things about firemans fund, chubb, USAA

  • Rule #1 — Buy your insurance from a reputable company, a name you know and trust. Price will determine most people’s buying decision, so shop around — keep in mind not all policies are the same so know what is covered and what isn’t for all types of claims.

    A rule of thumb, buy more liability coverage than you think you need — in DC, I would suggest a limit of at least $300,000 no less (and possibly an umbrella policy depending on your net worth). As far as coverage for your home and contents, the above suggestions are pretty good. Cover the value of your home (say if you lost everything in a fire), and always take inventory of your stuff, price it at replacement cost, and then add another $10,000 for good measure. You’ll probably add more stuff to your home each year and not update your policy limits. Again, monthly premium could influence how much coverage you can afford. Also, if you have valuables, make sure you ask if it’s covered. Some companies will cover specialty items up to a specific limit (all companies are different – so know what it thinks are specialty items) and if you have an expensive item(s) of anything (engagement jewelry, valuable art, personal collections, expensive guns, heirloom china/silver, even small biz inventory) you need to let your insurance company know so it can provide any additional coverage that would not be part of its normal HO policy.

    Oh, never compare your neighbor’s policy to your own. You are an individual and need your insurance set up to protect your own property and interests. If your neighbor is paying $250 less with a different company… so what. You don’t know anything about that person’s individual policy, how it’s underwritten and if it’s proper protection. That’s why you have to shop around for yourself.

    If you use an agent, you may get that “face-to-face” experience you think you need, but your agent will take a commission and if you ever have a problem, you are usually referred to a claims number and the agent has done nothing but sold you a policy you could have probably bought directly from that insurance company (State Farmy fans may argue this, but most agents I’ve dealt through the years are usually hands off after the sale). It takes about 15 minutes to educate yourself, so I suggest taking a little time to learn what the different insurance terms mean so you know what you really need, not what the agent thinks you need. It also allows you to be loyal to your wallet, not your agent. Again, choose a company with a good reputation. Consumer Reports did a study…

    USAA is exclusive, so unless you are Military, the spouse of Military, or the son or daughter of Military (with a few exceptions), you probably can’t qualify. But if you do qualify, it’s a fantastic company to consider.

  • I would suggest getting a Loss of Use policy. A friend had a condo fire and was able to get similar replacement housing for up to 18 months. Accordingly, I went with the same provider, State Farm. I may reconsider my low deductible ($500) based on the comments though. Haven’t filed claims so don’t know about their responsiveness. They do offer reductions for smoke alarms, amount of time without a claim filed, and security features. They also provide jewelry and furs coverage (not an added clause but part of the base package), so if your fashion tastes run wild…something to consider.

  • Also, if you are a landlord renting out your home you need to have a special Landlord’s policy. A friend of mine at work lost her condo in the big fire in Adams Morgan a few years ago – her insurance policy covered the lost rent for a year in addition to the cost of rebuilding. I got the same coverage for my house when I started renting it out, realizing if it was not rentable due to some catastrophe it would be very hard for me to pay the mortgage. You should also tell your tenants about renter’s insurance and make sure they know that your homeowner’s insurance would not cover their personal belongings.

  • Something I never would have guessed – but years ago a man’s un-leashed dog ran over and tripped me while I was roller-blading on Beach Drive and broke my elbow. His homeowner’s insurance actually covered my damages as well as several months of lost wages. With very little hassle too. (I suspect they were happy that I wasn’t actually suing them.) So that might be something for pet owners to check out.

  • Thanks everyone for your advice! It’s very helpful.

  • We were really pleased with the service from Fireman’s Fund when our (three-days old refinishing overhaul completed) basement flooded two years ago.

  • We have Travelers, and had to unfortunately use them for water damage less than 30 days after buying our house. They paid up, although there is still some back and forth about documentation for remaining recoverable funds.

    We wanted to go with State Farm, but their rates just weren’t competitive. I’m talking 300 more per year than other companies.

    Amica was our second choice, but they completely lowballed the replacement estimate and that spooked us.

  • After viewing the above comments I decided to see if I could get a better rate since I am now paying State Farm $1600 a year. I went online with Geico which holds my auto policy and they place homeowners through Travelers in DC according to the agent I later had to call to get the final quote.

    They said they were not insuring row homes in historic districts!!!!

    Anyone else have this problem? I am in the 14th St historic district.

    • I originally tried Costco, and they don’t insure rowhouses unless they have a firewall that extends three feet above the roof. Every company has different criteria.

      If your house has been completely renovated, make sure your insurance company knows it. My quote was much higher until I informed them the house had been renovated from studs out, with all new electrical and plumbing. It reduced my insurance by about $1000. Also if you have an alarm and/or burglar bars, make sure your insurer knows it. The alarm saves me about $50 a year.

  • Here’s a great short article at old house journal about historic home owners policies. I’ve been sending this link to people for years.

  • Consulting independent insurance brokers who have no loyalty to any specific carrier is the best idea. They can explain everything about your coverages and policy, while shopping your rates to find the best price.

    My name is Sharra Carvalho and I am the owner of Elite Insurance & Consulting Services, LLC. We are a independent insurance agency serving the DC,MD,VA.

    Please contact us for any insurance information you may desire. Office: (202) 905-5800, Email: [email protected] Web site:


Comments are closed.