Choosing insurance coverage for Single Family Houses

[Mary Healy]

Insurance Choices

What things are important to you when choosing between two policies. Which of these policies would you choose and why?

The property:

Single family, two-story home with partially finished basement.

3 Bed/2 bath 1400 sq ft. finished.

Built in 1920; stone foundation, aluminum siding.

Central air/forced air heating.

Updated kitchen, plumbing, electrical.

Additional building: barn can be used for storage with possible upgrade at a later date.

Purchase price: $94,000.

Commercial loan for 80% of value.

Rent $1050/month

The policy choices:

Cost	Policy A $726 annually	Policy B $1,008 annually
Coverage: dwelling	$113,296	$352,300
Other Structures	$2,000	$35,230
Personal Property	$1,500	$3,000
Loss of Rents	$22,659	$35,230
Landlord Liability	$100,000	$500,000
Medical Payments	$500	$5,000
Deductible	$500	$1,000

[Jared Newsom]

From an Insurance Agent's perspective, everything there is important.  Everything there is also customizable.  I would choose Policy B based on the liability and med pay limits, but I would ask your agent why the two have such different dwelling coverage amounts.  That number should be based on the cost to rebuild from the ground up in case of a total loss (do not include the value of the land and do not base the cost on the resale value of the property).  Where I am we use a rule of thumb of $125/sqft to rebuild, but yours may be higher.  Make sure you have a trustworthy agent with good referrals, not just an insurance "salesman".