{"id":2979,"date":"2023-11-08T15:04:50","date_gmt":"2023-11-08T15:04:50","guid":{"rendered":"https:\/\/www.gethomeinsurancequotes.com\/blog\/?p=2979"},"modified":"2023-11-08T15:04:51","modified_gmt":"2023-11-08T15:04:51","slug":"what-is-the-80-20-rule-in-homeowners-insurance","status":"publish","type":"post","link":"https:\/\/www.gethomeinsurancequotes.com\/blog\/what-is-the-80-20-rule-in-homeowners-insurance\/","title":{"rendered":"What Is the 80\/20 Rule In Homeowners Insurance?"},"content":{"rendered":"\n
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If you are purchasing a home, your lender will require that you carry homeowners insurance<\/a> to protect their investment in your home. Homeowners coverage will help cover the cost of repairing or replacing your home if it is damaged or destroyed by a covered peril.\u00a0<\/p>\n\n\n\n

Covered perils can include items such as a hurricane or other severe weather, burglary, or fire to name a few. When it comes to homeowners insurance, most insurers require following the 80\/20 rule to make sure you are properly covered and not underinsured.<\/strong>\u00a0\u00a0<\/p>\n\n\n\n

What exactly is the 80% rule?<\/strong><\/h2>\n\n\n\n

The 80\/20 rule is a standard in the insurance industry that simply says you need to insure your home for at least 80% of its replacement cost<\/a> to have full coverage on your home. If you are carrying less than 80% of the replacement cost your insurer may not cover the full claim amount if you have to make a claim on the policy at some point during the policy term.<\/p>\n\n\n\n

This can be especially relevant if you make renovations to your home which increase its value and do not notify your insurer and adjust the coverage levels on your home. While your insurance company or agent can help you determine appropriate coverage levels, knowing the total replacement cost of your home will help you make sure you are properly covered. <\/p>\n\n\n\n

What is your total replacement cost?<\/strong><\/h2>\n\n\n\n

The total replacement cost of your home<\/a> is simply how much it would cost to rebuild your home if it was destroyed by a covered peril such as a hurricane or fire. The total replacement cost is typically calculated by multiplying the average local per-foot rebuilding cost by the square footage of the house.<\/p>\n\n\n\n

Insurers use a variety of information when calculating the total replacement cost of your home. Some factors they use are:<\/p>\n\n\n\n