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Home & Family: Housing

How much insurance do I need to purchase for my house to be adequately covered?

Normally insurance companies require that a house have insurance to cover at least 80 percent of its replacement cost. This amount represents the minimum required to receive full payment for a partial loss. For example, if your home is worth $65,000 you need coverage for at least $52,000. Then if you have a partial loss of $15,000 you will receive full recovery costs. If on the other hand you have the house insured for less than the $52,000 you will only receive a percentage of the loss based on depreciation. To determine replacement cost, multiply the local building costs per square foot by the number of square feet in the house.