Given that medical (and legal) expenses can quickly mount, Rupp urges clients to buy as much liability coverage as they can afford. You'll need liability coverage in case you (or a family member) are legally responsible for causing injury to someone else at home or elsewhere. "Think about having to imagine yourself in every room of your home, trying to remember everything in it," says Doug. Before the fire at their home, the Colleys had begun an inventory but hadn't finished it - and it went up in smoke, too. ![]() In the event of a total loss, you usually have 180 days to provide your insurer with a list of everything you owned, from sofas to soup spoons. It will cost about $50 to $75 a year to double your protection to 20% of the dwelling limit. You can beef up your coverage by buying an endorsement - often called a building-code upgrade. Some insurers include full building-code coverage, but most include either an extra 10% of the dwelling limit or a flat $25,000, which may also have to go toward removal of debris. After a disaster, municipalities may quickly tighten their codes. New building codes often create a discrepancy between the limits of coverage and the actual cost to rebuild, says Kathleen Stalter, risk-services manager at Fireman's Fund. Your policy probably already has 25% extra coverage built in, but you can buy more in 25% increments - usually for $30 a year - up to another 100%, says Michelle Rupp, an independent agent in Seattle. That's one reason it's also smart to purchase extended-replacement coverage, which covers the difference if the price to rebuild exceeds your dwelling limit. ![]() Building costs can change not only with the economy but also after a disaster, when contractors and materials may be in short supply, says Don Soss, a vice-president of Fireman's Fund. Your policy should include an inflation guard that is keyed to regional costs and, ideally, adjusts your coverage every year. Keep in mind that you're not insuring the market value of your land, just the cost to rebuild your home, garage and any other buildings. Many insurers also require that you notify them within a certain time limit if the cost of an improvement to your home exceeds $5,000 if you don't, they may not cover the full cost to rebuild. If you let your coverage fall to less than 80% of the insurer-estimated cost to rebuild your home, your insurer may either reduce the amount it will pay to rebuild (for example, it will pay 75% of the cost on 75% coverage) or it might pay only for your home's actual cash value. Without adequate coverage, you may not have enough insurance to rebuild your home and replace its contents in the event of a fire, tornado or other disaster that leads to a total loss.
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