How Much Home Insurance Do I Really Need?

How Much Home Insurance Do I Really Need

As a first-time homeowner, buying home insurance can be confusing, especially regarding coverage. If you are confused and feeling overwhelmed, you aren’t alone! Many people have trouble understanding how much homeowners insurance coverage they need, so we have tried to make it easier to understand.


Dwelling coverage covers only your home’s structure – it does not cover any of your possessions in the house. Your dwelling coverage should cover the cost of replacing your home structure.

An extended plan can cover the additional cost of replacing your home structure, but for most people, it is unnecessary.


Content coverage is generally half the amount of your dwelling coverage, and it covers your home contents in the event of the core “16 perils.”

An extended plan may offer coverage of all possible perils and increased content coverage if needed. You may need to purchase additional content coverage insurance if you have many expensive items in your home or if you work from home.

Jewelry Etc.

Coverage for items like jewelry covers these valuable items in the event of theft. Basic insurance coverage of these items does not include loss.

An extended plan may cover valuable items in the event of theft or loss and requires an itinerary and evaluation of each item covered so the insurance can replace it at full value.


Liability insurance provides protection should someone get injured on your property or if a family member living on your property hurts someone or damages their property accidentally while away from your property. The minimum liability insurance for most insurance plans is $100,000, and the maximum is $500,000.

An extended plan may cover $300,000 and include an umbrella policy that covers any liability coverage that exceeds plan coverage.

Loss of Use

Loss of use insurance is usually equal to 20% of your dwelling insurance coverage. Loss of use insurance covers living and housing expenses if you cannot live in your home temporarily due to an event covered by your insurance policy.

An extended plan may offer additional loss of use coverage, but 20% of dwelling coverage is adequate for most homeowners.

Added Coverage

Added coverage includes additional coverage like earthquake or flood coverage. In most areas, this type of added coverage is not necessary. If you live in specified risk areas – for example, on the North Carolina coast – you should invest in the added coverage.

Minimum Coverage

Minimum insurance coverage will cover your basic needs and is the most affordable insurance plan. Remember, though, that often you are required to carry a minimum amount of coverage by your mortgage company.

Maximum Coverage

Maximum coverage is the most expensive policy you can purchase, as it covers everything at the maximum value possible. This type of plan is cost prohibitive and rarely recommended.


The amount of home insurance you need depends on a number of factors, but primarily, the estimated cost of your current possessions and whether or not you want the minimum or maximum coverage. If you are still unsure how much coverage you need, we recommend speaking directly with an insurance provider.