Structural Home Insurance

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Protect your Home Structure from Disaster

A common misconception about home insurance is that it covers the entire homestead, including the building. You need to purchase structural home insurance to cover the actual building you live in. While this is most applicable when you own and live in a home, it also applies to other buildings you own and rent.

Structural home insurance coverage typically pays for repairing or rebuilding if your home is damaged or destroyed by one of the named perils/disasters on the policy. Note that most home insurance policies will not pay for damage caused by an earthquake or flood. These types of natural disasters require a special peril policy. Any structures on your land need to be included in your policy, including barns, stables, pool houses, apartments, or sheds. You should be aware of the relative market value of your home. If not, you can make a reasonable guess based on your local real estate listings and the market. You may also speak to a real estate agent directly to get comparative listings, known as 'comps', or a free estimate of your home's worth. It's usually a 'no obligation' estimate, but be sure to ask. Depending upon your relationship with them, your banking institution may offer this service to you as a special account. Check to see if it's included in your benefits.

Structural insurance comes in handy when you need to completely replace a large portion of your home. If your home is worth $300,000, you need to insure it for more than that amount. The $300,000 you paid will include the cost of the land itself, which you shouldn't have to re-build unless you live in an area prone to disasters like earthquakes or mudslides. You will need to insure the actual structure with enough funds for repairs and re-building. A typical factor for deciphering the cost of a structure is the total cost minus 25-35%. Make sure that your structural insurance will replace that amount.

If you feel that you have a special situation that warrants additional coverage, obtain a quote from an appraiser who can appraise the house separate from the building lot. This would be a valuable service if you recently renovated. Remember, you will have to re-evaluate your home insurance regularly. Yearly renewal of the policy is a great time, at least every 3 to 5 years is appropriate. Remember, costs of repairs increase, just like everything else.