Choosing a policy, it is urgent to think about the replacement cost of your home. The replacement cost represents the amount of money necessary to substitute your home. The substitution cost will differ from the market value of your home due to the fact that the market value comprises the property the home is placed on and the present housing market. This makes the replacement cost different from your outstanding mortgage. Your replacement cost can be evaluated by appraisers, local builder association or insurance agent.
When you have identified home replacement cost it is necessary to make an analysis of it and make periodical revises when necessary.
Insurance companies usually add an increase of coverage every period (a year) to take into account inflation. You may have other necessary things to take into consideration to fix your replacement cost.
If you have remodeled any parts of your home such as kitchen or bathroom modifications it can also change the replacement cost of your home.
Remember that your home insurance policy should comprise coverage for living expenses while the home is rebuilt or repaired.