You know you need home insurance as a homeowner in New Orleans, LA, but how much? One way to find out is by applying the 80 percent rule to your home insurance policy. The 80 percent rule recommends insured homeowners carry coverage equal to at least 80 percent of the total replacement cost of their home. MultiSurance explains how the 80 percent rule works and gives you tips on how to apply it to your home insurance policy.
How to Apply the 80 Percent Rule to Home Insurance
Step 1: Find the Total Replacement Cost of Your Home
The first step in applying the 80 percent rule is to understand the total replacement cost of your home. This cost is the amount it would take to rebuild your home in the event of a total loss. It is important to note that the replacement cost differs from your home’s market value. Your home’s market value includes the price of the land and other factors not included in the cost of rebuilding.
Step 2: Determine Your Coverage Limit
Once you have the replacement cost of your home, you can calculate your coverage limit by multiplying the replacement cost by 80 percent. For example, if your home’s replacement cost is $300,000, your coverage limit should be at least $240,000 ($300,000 x 0.8). It is essential to ensure that your coverage limit is equal to or higher than this number to prevent underinsuring your home.
Step 3: Contact An Experienced Insurance Agent
Finally, to apply the 80 percent rule to your home insurance policy, you need an experienced insurance agent. At MultiSurance, we are dedicated to providing our clients in New Orleans, LA and surrounding communities with insurance policies designed to meet their needs. Contact us today for more information.
