The second pillar of insurance planning protection that a person needs to secure their financial freedom is homeowners insurance. Following life insurance, you need to have the proper amount of homeowners insurance. With a little bit of homework, you can learn what the replacement cost of your home would be in case of a total loss. This is quite variable from geographic area to area. It is also influenced by the materials in the structure of your house. The amount of improvements and upgrades your home has will play an important role in the coverage you will need. A typical home replacement cost can cost from $175.00 to $200.00 per square foot. Therefore a 2000 sq.ft. home at $200.00 per sq. ft. would need about $400,000.00 of insurance coverage to ensure adequate replacement coverage. If you try to cut corners, a serious loss against your policy could leave your financial freedom in jeopardy so you definitely want proper protection on your home.
The next aspect of coverage that you want to become familiar with are the two parts of a typical Homeowners Policy. The first part is the actual limits of property protection. This includes coverage for the dwelling, the contents of the home, and the loss of use of the home should you have to live off of the premises during a repair. The second part covers you for liability in case someone gets hurt on your property. This section also contains medical payments and the particulars that go along with the liability portion. Once again, it is in your best interest to not cut any corners here.
As is very typical of the insurance industry, homeowners policies, can be bought with several endorsements. These will increase your coverage over the policy limits. Increasing your coverage in case of theft, extended replacement costs and inflation protection are some of the more popular endorsements. If you are just starting out, you might think you do not need any of these extras. The truth is that you should get as much coverage as you can afford. You want to sleep well at night and not worry about any minor matters that could build up over time and attack your financial freedom.
Finally, also understand that a basic policy will have several exclusions for which there will be no coverage. Calamities such as earthquakes, vermin damage, floods, power failures etc. can be addressed with an endorsement if it is appropriate for you to do so. You want to be certain to get enough coverage protection for your home by including these environmental variables or your financial freedom could be ultimately at risk.
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