Homeowners insurance protects your investment in your home. The 80% rule is a guideline to ensure coverage meets the requirement for full rebuilding. Homeowners must focus on replacement cost rather than market value to determine insurance needs. Regular assessments of coverage are necessary due to fluctuations in home value and construction costs, as well as for addressing risks like natural disasters. If 80% coverage is unattainable, alternative solutions, including various policy options and state resources, are recommended.
Calculating replacement cost involves knowing your square footage and the average cost per square foot to rebuild in your area. Regularly review and reassess your policy to account for changes in home value, construction costs, and potential risks like natural disasters.
It is recommended to have at least 80% of your home's replacement cost as coverage to ensure adequate protection. If you struggle to meet the 80% threshold, consider options like state-run plans, layering policies, high-deductible options, or seeking coverage from surplus lines insurers.
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