Does Your Home Insurance Provide Full Protection?

Check your coverage

Insurance for replacement value of your home's structure is listed under "dwelling limit," or Coverage A, on your policy. Structures not physically attached (such as garages, decks and fences) are listed under Coverage B and are usually insured for about 10% of the dwelling limit.

Estimate the cost to rebuild

You need coverage for full replacement cost, not actual value, of your home and possessions. A building contractor can estimate the cost to rebuild (typically from $180 to $350 per square foot). Multiply the total square footage of your home (not just living space) by the estimated construction cost. Add at least 15% to 20% to account for future price increases. Or use the calculator at AccuCoverage.com ($7.95 per report).

Update your liability coverage

Policies often include a limit of $300,000, but you'd be better off with coverage equal to one to two times your net worth. Purchase an umbrella policy for extra protection.

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Account for living expenses

Make sure you have enough for rent and other expenses after a total loss (Coverage D, also known as additional living expense or loss-of-use coverage). Insurers usually include coverage equal to 20% of your dwelling limit, which expires within 12 to 24 months, even if you haven't hit the max. You need two years' worth of coverage.

Do a home inventory

Personal possessions (Coverage C) are usually set at 50% to 75% of the dwelling limit. Use the Insurance Information Institute's free online tool at www.knowyourstuff.org to take an inventory and store it (along with photos) online. You should also print the report and store it in a fireproof safe or bank safe-deposit box.

Insure your valuables

Policies usually set limits of $1,000 to $2,500 per category, such as jewelry, silverware, guns, fine art, musical instruments and wine. You can buy riders to increase coverage. Even if your policy's limit is higher -- say, $5,000 -- it may have a lower limit (perhaps $2,000) for any individual item.

Prepare for disaster

Standard policies typically cover wind damage from hurricanes and windstorms, but not damage from sewer backups, floods or earthquakes (read more about disaster coverage here).

Esswein joined Kiplinger in May 1984 as director of special publications and managing editor of Kiplinger Books. In 2004, she began covering real estate for Kiplinger's Personal Finance, writing about the housing market, buying and selling a home, getting a mortgage, and home improvement. Prior to joining Kiplinger, Esswein wrote and edited for Empire Sports, a monthly magazine covering sports and recreation in upstate New York. She holds a BA degree from Gustavus Adolphus College, in St. Peter, Minn., and an MA in magazine journalism from the S.I. Newhouse School at Syracuse University.