Page 27 - Kiplinger's Personal Finance - November 2018

DWELLING Your dwelling limit is based on the estimated cost to rebuild your home, not its market value (or the value of your land). You can ask your
agent to estimate this cost for you, or you can hire an independent appraiser or ask a local builder what it costs to build a comparable home. Your dwelling limit
should be at least 80% of the estimated cost to rebuild. Rather than regular replacement cost, which will pay up to your dwelling limit, choose guaranteed
replacement cost, which will pay the full cost of rebuilding your home to the same level of construction and quality as before (it will add about $50 to $100
to your premium), or extended replacement cost, which typically caps payments at 25% or 50% above your limits. Choosing an open perils policy rather
than one with specific named perils means you’ll be covered for a broader array of issues, such as water damage caused by rain entering an open window. It will
likely cost an additional 15%. Ordinance or law coverage pays the extra amount needed to rebuild your home to comply with new building codes.

PERSONAL PROPERTY
The limit on personal property, or
contents, will typically be up to
50% or 75% of your dwelling cov-
erage limit. Replacement cost is
preferable to actual cash value,
which pays only the depreciated OTHER STRUCTURES
value. It costs about 15% more. A Detached structures, such as a
scheduled personal property garage, shed, fence or pool, are
endorsement can add extra cov- typically covered for up to 10%
erage for expensive items, such as of your dwelling limit.
jewelry, art, musical instruments or
antiques, which are usually covered
for less than their actual value and
may have other limitations.

LIABILITY This will cover your
financial loss if you’re sued and
found at fault for personal injury
to others or for damages (world-
wide, not just on your home prem-
ises). Buy at least $500,000 worth
(it should add $40 or less to your BUILDING A SOLID POLICY
premium). Check whether your in-
surer imposes lower limits for a Use this graphic as a guide to what’s in your homeowners policy and what your limits should be. In addition
pool, trampoline or certain breeds to the coverages listed here, all policies have a loss of use provision that will typically pay up to 20%
of dog (or excludes them alto- of your dwelling limit for you to live elsewhere while your home is being repaired (you might want to
gether). For liability coverage be- increase this amount if you live in an expensive area). It’s a good idea to take stock of your possessions
yond what your policy provides, with a home inventory tool, such as the free app or spreadsheet offered by advocacy group United
consider an umbrella policy (see Policyholders (www.uphelp.org/pubs/how-create-home-inventory).
kiplinger.com/links/umbrella). 11/2018 KIPLINGER’S PERSONAL FINANCE 45

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