That’s a question we hear frequently at Bearce Insurance. The answer is, of course, “It depends!”

The amount of insurance needed to protect the investment you have made in your home depends on many factors, including the size of the home, its age, location, improvements that may have been made. But let’s clear up some misconceptions about what the amount of insurance coverage should be based on.

In today’s red-hot real estate market some homes have a very high market value. But market value plays little or no role in a home’s insurable value. The number we look at when advising customers on home insurance coverage is the cost to replace the physical dwelling. That’s the maximum insurance you should consider.

Now, replacement costs will vary by location, as construction costs can be much higher in some areas and lower in others. And you should take into consideration additions or improvements that have been made to the home that will also need to be replaced. The insurance industry has developed excellent replacement cost calculators that can provide an accurate estimate based on a home’s zip code. We’d be happy to provide a replacement cost estimate for your home.

What about your mortgage? Keep in mind that banks and mortgage companies lend based on a property’s market value. This may lead to a situation in which your mortgage balance is higher than the cost to replace a dwelling that is actually on the property. Do you need to insure your home for more in order to cover the mortgage balance?

In Massachusetts the answer is “No,” as the law offers some protection. The Massachusetts General Laws (specifically, Part II, Title I, Chapter 183, Section 66) states that:

“A bank, lending institution, mortgage company or any mortgagee doing business in the commonwealth, when making a mortgage loan, shall not require, as a condition of a mortgage or as a term of a mortgage deed, that the mortgagor purchase casualty insurance on property which is the subject of the mortgage in an amount in excess of the replacement cost of the buildings or appurtenances on the mortgaged premises.”

Contact Bearce Insurance About Homeowners Insurance in Brockton or Bridgewater

The best way to calculate how much insurance you should place on your home is to have a discussion with a trustworthy agent with experience in home coverage. We’d be happy to give you the benefit of our many years of experience with homeowners insurance in Brockton, Bridgewater and the surrounding area. Please contact us locally at 508-586-3400 or toll-free at 800-498-9900, or get an online quote.