It’s a terrible mistake to drop your homeowners insurance once your loan is paid off. In the case of a disaster or accident, you’ll be left with exorbitant bills to pay and no coverage. Many people underestimate the importance of insurance, and they also have a hard time determining how much they need. Below is a quick guide to help you understand what’s at stake and how you can calculate that figure.

How Much Homeowners Insurance Should You Have?

Dwelling Coverage

Dwelling coverage insures the structure of your home and pays for repairs or replacement should it be damaged or destroyed. In the case of a fire or severe storm, you would need enough dwelling coverage to pay to rebuild the house. If you only buy enough to cover your outstanding loan balance, you could find yourself homeless in an emergency. Contact a builder for an estimate of what it would cost to rebuild your home at current prices, and purchase at least that much coverage.

Personal Property Coverage

Personal property coverage protects the contents of your home. Should a fire or storm destroy the house, you would lose all the furniture, appliances, clothing, electronics, as well as your other belongings. Take a careful inventory of your possessions and estimate the cost to replace them. Purchase enough personal property coverage to reimburse you for a total loss.

Liability Coverage

Liability coverage protects you in case someone is injured or suffers property damage on your premises. For instance, if your dog bites a neighbor who requires medical care for the wound, your homeowners insurance policy covers the cost of treatment. It will also include the lawyer fees, court costs, and settlement or judgment amounts if you are sued for causing damages or injury. You need enough liability coverage to protect your assets from seizure should you be found liable in a lawsuit. The more assets you have (savings, real estate, investments), the more important liability insurance becomes.

Kleppinger Insurance is the leading home, life, auto, and business insurance agency in Bethlehem, PA. Their friendly agents can help you choose the right types and amounts of homeowners insurance to protect yourself and your family from a financial disaster. Contact them through their website or call (484) 357-1485 to discuss your options with a professional today.