Do you need to purchase homeowners' insurance for the first time, but don't know much about it? If so, you'll likely have the following questions about protecting your most valuable asset.

How Much Coverage Is Necessary? 

A big question that many people have is about how much coverage they actually need for their homes. There is no easy answer to the question since you likely do not know how much money it costs to cover everything in a total loss situation.

Your dwelling coverage should not match what you paid for the home, but how much it would cost to rebuild your home from the ground up. Think about if you had a house fire that caused everything to be destroyed. You need enough coverage to not only cover building the home from scratch but also cover the cost of removing the debris from the old home as well. 

You can get an idea of how much your home is worth by looking at the appraisal, which you likely have as part of the home buying process. Your insurance agent will then add some more coverage on top of this value to make sure you are fully covered.

Will Your Home Insurance Premiums Go Up Each Year?

One of the reasons that home insurance premiums increase each year is not due to your insurance provider raising rates. It's actually due to them increasing your coverage limit to match inflation. If you bought a home that cost $300,000 to rebuild today, chances are that it is going to cost more to rebuild it in 30 years. If you continue staying in your home, you need to gradually increase your coverage levels over time so that you have enough money to rebuild your home in the future when construction costs are higher. 

Is Liability Coverage Necessary?

While most of your insurance policy is designed to protect your home from fires, theft, and other unforeseen incidents, liability coverage protects your home from being taken away from you in a lawsuit. If someone were to become injured while on your property and sue you for the damages, liability coverage helps pay for their medical bills so that your home isn't used to pay for a settlement. It's one more way that your insurance provider can give you peace of mind that your home will be protected.

Reach out to a homeowners' insurance agent for more information about home insurance.