When it comes to protecting your biggest investment—your home—not all insurance coverage is created equal. While basic policies might meet your lender’s requirements, that doesn’t always mean you’re fully protected from unexpected losses.
So, what is considered good home insurance coverage? Let’s break it down.
✅ 1. Proper Dwelling Coverage (Your Home’s Structure)
This is the cornerstone of any homeowners policy. Good coverage should insure your home for 100% of its replacement cost—the amount it would take to rebuild your home from the ground up using today’s labor and material prices.
🏠 Pro tip: Don’t confuse replacement cost with market value. Market value includes land and location, which insurance doesn’t cover.
A good policy will meet or exceed the 80% rule, but ideally it should be at 100% to ensure you’re fully reimbursed after a covered loss.
✅ 2. Personal Property Protection
This covers everything inside your home—furniture, clothing, electronics, appliances, and more.
- Look for Replacement Cost Coverage (RCC) rather than Actual Cash Value (ACV). RCC pays for the cost to replace items at today’s prices without deducting for depreciation.
- Good coverage is typically 50% to 70% of your dwelling limit.
If you own expensive items like jewelry, art, or collectibles, consider adding riders or endorsements to fully protect them.
✅ 3. Strong Liability Coverage
Liability coverage protects you financially if someone is injured on your property or if you accidentally damage someone else’s property.
- Good policies offer at least $300,000 in liability protection.
- For added peace of mind, many homeowners choose $500,000 or more, especially if they have significant assets.
- An umbrella policy can provide even higher limits affordably.
✅ 4. Loss of Use / Additional Living Expenses (ALE)
If your home is uninhabitable due to a covered claim (like fire or storm damage), ALE pays for hotel stays, meals, and other living expenses while your home is being repaired.
- Make sure your policy covers 12 to 24 months of living expenses with a reasonable daily limit.
✅ 5. Other Structures Coverage
This covers detached structures like:
- Garages
- Sheds
- Fences
- Guesthouses
A good policy typically includes 10% of your dwelling coverage for these, but it can be increased if needed.
✅ 6. Additional Riders & Endorsements (Optional but Important)
Depending on your location and lifestyle, you might need more than a standard policy:
- Flood insurance – Not included in typical policies; often required in high-risk areas.
- Earthquake coverage – Essential in California and other seismically active regions.
- Sewer backup coverage – A small add-on that can save you from big headaches.
- High-value item coverage – For jewelry, collectibles, or artwork.
✅ 7. Balanced Deductible and Premiums
Good coverage doesn’t mean overpaying. Choose a deductible you can afford in the event of a claim, and balance it against your monthly premium. Higher deductibles often mean lower premiums, but make sure it won’t create financial stress if a claim arises.
A Quick Recap: What Makes Home Insurance “Good”?
| Coverage Type | Good Coverage Guidelines |
|---|---|
| Dwelling | 100% of replacement cost |
| Personal Property | 50%–70% of dwelling limit, RCC preferred |
| Liability | $300,000–$500,000+ |
| Loss of Use (ALE) | 12–24 months of living expenses |
| Other Structures | 10% of dwelling limit or more |
| Endorsements/Riders | As needed (flood, earthquake, valuables) |
| Deductible vs. Premium | Balanced for affordability |
Protect What Matters with a Local Expert
Every home is unique—your coverage should be, too. At Eugene C. Yates Insurance Agency, we’ve been helping Sacramento homeowners get affordable, comprehensive insurance coverage since 1946. Our team works with the top carriers in the industry to create a custom policy that fits your lifestyle and budget.
Whether you’re buying your first home or reviewing an existing policy, let’s make sure your coverage isn’t just “good”—but great.
📞 Call us today for a free quote or policy review
🌐 Or visit us online to compare top-rated home insurance plans in minutes
Eugene C. Yates Insurance Agency
Sacramento’s Trusted Insurance Experts Since 1946