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The size of your hazard insurance coverage should be based on what it would cost to rebuild your house, according to the California Department of Insurance website. For example, if you bought your San Diego home for $300,000 and added a $100,000 expansion, you'll need $400,000 in coverage to rebuild. The department recommends that you buy a guaranteed replacement policy, which pays even if the replacement cost is more than your coverage; this could be vital if construction costs rise after a disaster.
Homeowners insurance typically covers possessions like furniture, books, clothes and kids' toys up to 50 percent of the total house coverage, according to the California Department of Insurance. For example, if you have a $400,000 hazard insurance policy, that should provide at least $200,000 to replace the contents of your house. There's a limit to how much insurers will pay for valuable single items or collections like furs, jewelry or rare coins, so if you have anything
of that sort you should take out a "floater" providing extra coverage.
Most homeowners policies offer at least $100,000 in liability coverage, notes the Insurance Information Institute website, but the recommended level is $300,000 to $400,000. If you have substantial assets---enough to make you an attractive target for a lawsuit---you might consider paying for a policy that offers even more coverage.
Many homes destroyed in the early 21st century in California wildfires didn't carry enough insurance to pay for rebuilding, according to the California Department of Insurance. To know how much hazard insurance you need, you need to have a realistic idea what your home is worth. For a quick check, multiply the square footage by the current dollar per square foot construction costs in your area, Or, if you want a more precise figure, you can pay for an appraisal. You should also go through your house, itemize your possessions and calculate what the total replacement costs would be if you lost everything.