How Much Does It Cost to Make a Will?

How Much Does It Cost to Make a Will?

With costs as low as $10, making a will doesn’t have to be expensive, but you may want to spend more to get exactly what you need. Granted, the prospect of writing a will can feel boring, morbid, and as if it will be a big drain of time and money. While there’s no doubt that thinking about a world without you on it isn’t “fun,” the peace of mind that people can obtain from making a will, the right will, can be invaluable. Whether you choose to go with an online template that will guide you through the how-to’s of creating a will or work with an attorney, it’s important to know your options. Let’s dive into that now and see how much making a will costs and which approach is best for you.

How Much Does it Cost to Make a Will?

The cost of a will varies from free to thousands of dollars, depending on whether you do it yourself or work with an attorney. Some people with a fairly straightforward situation (basic assets, one child) may find that an online template provides everything they need at a low cost. In general, however, people with high-net-worth or a complex personal situation, such as needing to provide for a disabled family member, may find it advantageous to work with an attorney.

You may wonder if you need a template at all. Can’t you just take pen to paper to share your wishes? In some states, the answer is yes: A handwritten will is legal. But there are good reasons to not write up a will on a piece of notebook paper. Not only can these take longer to go through probate — a legal process that vets the validity of a will — but a template may help make sure all bases are covered and legally valid.

There are templates online that are free, but some that are state-specific and go into greater depth (say, by guiding you through more questions about your situation) may cost from $40 up to over a hundred dollars.

If you work with an attorney, you may pay $1,000 or more to create a will. But working with an attorney may be beneficial if you have a complex situation. For example, an attorney can help you create a trust, which can be one way to avoid probate and may provide tax advantages for your heirs. They may also have recommendations for the most tax-advantageous way to set up a will and can also answer any questions that may come up as you make the will.

Recommended: How To Make a Will: 7 Steps

Regardless of how you create a will, it’s also important to ensure that your will is legal in your state. This may mean having the will notarized or witnessed when you sign. It can also be a good idea to make several copies of the will, and let your executor know where the will can be found.

You also may need to update your will. You can do this via a codicil (this is akin to a PS to your will), but in many cases, it may make sense to create an entirely new will to avoid confusion. You may consider updating or redrafting your will whenever a major life event occurs, such as marriage, divorce, or the birth of a new child. If you’re working with a lawyer, ask them how they will handle potential changes and how much they will charge.

The Cost to Have a Lawyer Write a Will

Having a lawyer write a will may be the most expensive option at $1,000 or more depending on where you live and the complexity of the will. However, this path can have its benefits.

Creating an Estate Plan

Working with a lawyer can ensure you cover all bases and potentially create an estate plan. This can maximize tax-savings opportunities for your heirs. As part of this, a lawyer can be helpful in setting up a trust. A trust can be a tax-advantageous way to distribute assets upon your death and help avoid the possibly long and winding process of probate.

Recommended: Estate Planning 101: The Basics of Estate Planning

Negotiating a Large or Complicated Estate

You also may want a lawyer if you have a large or complicated estate, with a variety of assets, which could be investments, real estate and the like. Also, if you have a complicated family situation, a lawyer can be very helpful in creating a will that addresses these situations. In this case, scenarios include divorce, remarriage, step-children, or complex (possibly contentious) relationships.

Developing End of Life Documents

When drawing up a will, a lawyer also can make sure that you have all end-of-life documents in place. While “will” can be used as a catchall term for end-of-life documents and directives, other important documents can include:

•   A medical power of attorney

•   A living will or advanced healthcare directive

•   Do-not-resuscitate orders

All of the above documents reflect what would happen if you were no longer able to advocate for yourself and needed someone to make medical decisions for you.

Before you work with a lawyer, make sure you’re clear on the fee structure: Will they charge by the hour? How much will it cost to update things in the future? Is there anything you can do on your own to help save money?

Cost Of Writing A Will Yourself

Online templates range from free to several hundred dollars, depending on the complexity and the range of documents provided. Online templates can help guide you through itemizing your assets and can be simple to update if necessary. Here are some details to note:

Online Templates Can Offer a Speed Advantage

Online templates may advertise that wills can be completed in 15 minutes or less. This can be true as long as you have relevant information at your fingertips. Prior to beginning a will (either online or with a pro), it can be helpful to itemize assets and discuss guardianship and executor plans with the people you hope to name prior to starting. This will make the process run more smoothly.

Online Templates May Need Witnessing

Once an online template is filled out, it will likely need to be signed and witnessed to be made legal. Keep this in mind: If you are thinking you can complete your will 100% online and don’t need to leave your home, you may be in for a surprise.

Some online services offer attorney services for an additional cost. This can be a hybrid option that allows you to have a lawyer answer any specific questions while doing the majority of the work yourself.

Recommended: What Happens If You Die Without A Will?

What’s the Difference Between a Trust and a Will?

You may see the terms trust and will used interchangeably. That’s wrong; a trust is not a will! A trust is a customized estate planning tool that can be helpful to heirs in addition to a will. If you hold assets such as real estate or have a positive net worth, a trust may make sense.

A trust can help your heirs:

•   Avoid probate, the legal (and sometimes lengthy) process in which property is distributed

•   Potentially limit tax implication of any gifts or inheritances

Trusts can be complex, but a fairly simple trust can be created through online templates. Having a trust can help ensure that your assets not only go to the people you intend them to go to, but that your heirs are provided for exactly in the way you intended. The time spent making the trust can pay off in peace of mind, both for you right now and for your heirs in the future.

Recommended: What Is A Trust Fund?

Does a Will Need to be Notarized?

You’ve taken the time, created a will, and printed it out. You’re done, right? Not so fast! A will usually does need to be signed and watched by a witness.

What’s more, while a will does not always need to be notarized to be valid, it may be in you and your beneficiaries’ best interests to do so. When a will is notarized, it is considered “self-proving,” which helps confirm that you had the mental capacity to create the will and were not under any duress. It proves the validity of the document and therefore can help avoid probate. Notarizing a will is typically a fairly minor expense of up to $15.

While it can be tempting to put off the notarization process (we know, it can be a hassle to find a notary nearby), getting it done immediately ensures that there are no loose ends if the worst were to happen unexpectedly. It can also be a good idea to make sure the will is printed out and put in a safe place, like a bank safe, and that your executor knows where to find it.

What Should You Never Put In a Will?

There are some things you want to sidestep when creating a will. Here are some considerations that can make the probate process more difficult.

•   Certain types of property, including property owned jointly, life insurance, or other accounts with a beneficiary already named.

•   Specific funeral or end of life wishes. The will may not be read until weeks or months after death.

•   “Rules” about who gets what. A will is not the place to put limitations on gifts, such as money only being available if someone were to marry or turn a certain age.

•   Providing money to pets. However, you can set up a trust to ensure that a pet is provided for.

•   Provisions for taking care of a dependent beneficiary. These kinds of long-term care needs can also best be set up in a trust.

In short, a will can’t cover all the what-ifs, but in many cases, a trust can do so. If you’re not sure how to appropriately manage your estate, consider consulting with a lawyer.

The Takeaway

Creating a will does not need to be expensive or time-consuming to be valid. While a trust may make sense for complex needs or if you have a positive net worth, having a will drawn up in the short term can cover your bases, ensure guardianship wishes are met if you have kids, and provide peace of mind now and in the future. Whether you spend $10 or over a thousand dollars creating one, if you have assets and/or dependents, now is a good time to act!

Protection You Can Trust from SoFi

Wills and estate planning are important steps in managing your financial and legal life. But while you’re thinking about these topics, why not also make sure you are protecting yourself and your loved ones in other ways? SoFi works with some top-notch, reliable partners to bring you auto, homeowners, renters, and life insurance policies. Come take a look at how easy and affordable we’ve made these.


Photo credit: iStock/fizkes

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.
This article is not intended to be legal advice. Please consult an attorney for advice.
SoFi offers customers the opportunity to reach the following Insurance Agents:
Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.

Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

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Loss of Use Insurance: What is It, and What’s Covered?

Loss of Use Insurance: What is It, and What’s Covered?

When most of us think of homeowners insurance, we think about getting coverage for major home repairs — the big-ticket items the insurance company can pay out for in the event of a loss or damage. We’re talking about things like a tree falling over in a storm and wrecking your roof or a robber making off with your electronics and jewelry.

Sure, you need that kind of protection, but your homeowner’s insurance policy should also include a very important kind of coverage beyond that: loss of use coverage. This is also sometimes known as additional living expenses (ALE) coverage or Part D coverage. Loss of use coverage is an important part of your home insurance (and some rental insurance policies) that kicks in when your home is rendered uninhabitable. Let’s say in the example above, where your roof needs major repair work. You may not be able to live in your home while this is underway. Since you have “lost the use” of your typical living space, the policy will help you pay for lodging and other expenses.

Read on to learn more about the loss of use coverage, including coverage limits and policy conditions. It’s an important consideration if a worst-case scenario ever happens to your home sweet home.

What Does Loss of Use Coverage Mean?

Loss of use coverage is the part of your homeowner’s insurance policy that covers the costs you’ll incur if you lose the usage of your home.

For example, if a fire destroys a significant portion of your house and it needs to be rebuilt, your typical home insurance policy will cover the cost of repairs. But (and this is a biggie) you may find yourself suddenly facing a whole lot of living expenses you otherwise wouldn’t. Hotel rooms and restaurant meals can add up quickly, and without your own kitchen and bedroom to cook in and retire to, you’d be pretty much forced to take advantage of these expensive options. Or perhaps you have to put your possessions in storage as your home is rebuilt, or even rent an apartment. These are the kinds of expenses that loss of use coverage will typically reimburse.

Recommended: Homeowners Insurance Coverage Options to Know

Coverage Limits

Like most other forms of insurance, loss of use coverage does come with certain limits — you don’t have carte blanche to go out and stay at a swanky hotel for months and eat exclusively Wagyu beef on the insurance company’s dime.

Generally, loss of use insurance is calculated and expressed as a percentage of your dwelling coverage limit — the amount of money up to which the insurer will pay out to repair or rebuild your home in the event of a qualified loss.

For example, if your dwelling insurance limit is $350,000, and your loss of use coverage is 20%, you’d have up to $70,000 to put toward living expenses during the time your home is being repaired. That may sound like a lot of money, but you’re likely to face a lot of expenses, especially since you’ll still be responsible, during that time, for paying your mortgage, insurance premiums, and other normal monthly bills.

Loss of use coverage is most commonly between 20% and 30% of the dwelling coverage limit, but it is possible to find plans with a higher loss of use limit — or a lower one.

In fact, although loss of use coverage is fairly standard, it is possible to purchase a homeowners or renters insurance policy that doesn’t include it, so always be sure to read your paperwork in full, including the fine print, to ensure you know what you’re getting.

Recommended: What Is Renters Insurance and Do I Need It?

Policy Conditions

Loss of use coverage is subject to additional conditions along with the coverage limit. For example, you’ll most likely be asked to prove your expenses to the insurance company in order to get the claim paid — so be sure to keep the receipts for all those hotel-room breakfasts!

Your policy may include other terms and conditions as well. Yet again, another good reason to get nice and cozy with that fine print.

Which Living Expenses Are Covered By Loss of Use Insurance?

Although the loss of use insurance covers many different kinds of living expenses while your home is being rebuilt or repaired, it doesn’t cover everything.

Once again, the only place to get verified information about what your specific policy covers is — you guessed it — your specific policy paperwork, but here are some of the most common covered costs.

•   Temporary housing, such as hotels, motels, or a temporary apartment

•   Moving costs

•   Public transportation

•   Grocery and restaurant bills beyond your typical expenditure

•   Storage costs

•   Costs to board a pet

•   Laundry costs

•   Parking fees

Once again, refer to your policy documentation in order to confirm which expenses are covered under your plan.

What Else Does Your Home Insurance Cover?

Loss of use coverage is only one small part of your overall homeowner’s insurance policy, which likely has several different coverages built in. A standard homeowners insurance policy offers coverage in the following categories:

•   Dwelling coverage, which covers the cost of repairing or rebuilding your house up to the given limit

•   Personal property coverage, which covers the costs of replacing your belongings in the event they are stolen, lost or damaged as part of a covered event

•   Personal liability coverage, which pays out to cover the medical or legal expenses you might incur if someone is accidentally hurt on your property (for example, if they’re bitten by your dog)

•   Additional coverages, such as coverage for additional structures on the property, specific damaging events (or “perils”) that aren’t listed in the standard policy, excess coverage for expensive belongings, etc.

As you can see, homeowners insurance is about way more than insuring the four walls of your home, though it should cover that, too. Keep in mind that each of these coverages comes with its own limits and policy conditions. (We’d remind you to read the fine print again, but at this point, you’ve probably got it. Right?)

In addition, homeowners insurance generally involves — as do most forms of insurance — paying a deductible when it comes time to file a claim. That means you’ll be responsible for a certain out-of-pocket cost to cover even coverage-eligible sustained damages, although the insurance company will likely pay out significantly more. (For example, a homeowners insurance deductible might be $1,000, which isn’t nothing… but is a lot better than paying $30,000 out of pocket to replace your entire roof. In this instance, you’d pay $1,000 while the insurer would pay $29,000.)

Deductibles are charged in addition to the premiums you pay on a monthly, quarterly, or annual basis simply to keep the insurance policy active. (Typically, the higher the deductible, the lower the premium, and vice versa.) Again, it may feel like a pain to have to pay so much money simply to have insurance just in case something happens, at which point you’d have to pay out your deductible as well… but for most of us, our homes are the single largest purchase we ever make and the biggest asset to our names. It’s an investment worth protecting, especially when you consider the often astronomical cost of even basic home repairs.

The Takeaway

Loss of use insurance is a type of coverage baked into most homeowners and many renters’ insurance policies. This coverage pays out toward the extra living expenses you’ll incur if your home is rendered uninhabitable by a qualified loss, such as the cost of hotel rooms, additional food expenses, pet boarding, and public transportation.

While homeowners insurance is a valuable financial tool, it’s not the only one to keep in your tool belt. If you have family members and loved ones who rely on your income in order to maintain their lifestyle and comfort, life insurance can be a great way to ensure your death is primarily an emotional, rather than financial, loss.

SoFi has teamed up with Ladder to offer high-quality life insurance plans that are quick to set up and easy to understand, and our overall policy limits go up to $8 million. You can get a decision in minutes today, right from the comfort of your home — which, after all, already has its own insurance policy. (Right?)

Photo credit: iStock/Ridofranz


Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Homeowners Insurance Deductible: What It Is And How To Choose

Homeowners Insurance Deductible: What It Is and How To Choose

Homeowners insurance is not quite as simple as paying each month and then, if something bad happens, the insurance company will automatically cover it all. Generally speaking, you’ll still be on the hook for a certain amount of money if and when the time comes to file a claim. That amount is called your homeowners insurance deductible, and you do get some leeway when it comes to choosing it.

Here’s what you need to know about homeowners insurance deductibles, and how to decide on an amount that’s right for you.

What Is a Homeowners Insurance Deductible?


A homeowners insurance deductible is the amount of money you’ll pay out of pocket when you file a claim for damage repair or replacement. In other words, it’s your portion of the responsibility for the expense.

For example, say your home weathers a windstorm and sustains roof damage to the tune of $10,000. If your deductible is $1,000, you’ll pay that much toward covering the repair cost, and the insurance company will pay the remaining $9,000.

Keep in mind that your deductible is distinct from your insurance premium, which is the amount you pay on a monthly, quarterly or annual basis, regardless of whether or not you’re filing a claim, to keep the policy active.

Types of Homeowners Insurance Deductibles


Homeowners’ insurance deductibles can be calculated in a variety of different ways. The two most common are flat deductibles and percentage deductibles.

Flat Deductible


A flat deductible, as its name suggests, is one that’s charged as a flat fee regardless of the full price of the damage. In our roof damage example above, the flat deductible is $1,000.

Indeed, $1,000 is a pretty standard deductible for those who choose a flat homeowners insurance deductible, though lower deductibles ($500) and higher deductibles ($2,000) are also available. Of course, like any other insurance product, the lower your deductible is, the higher your monthly premiums will be — and vice versa. It’s important (and often challenging!) to strike a balance between ample coverage and affordability.

Percentage Deductible


Percentage deductibles are those that are assessed as a percentage of the total insurance coverage amount on your home.

For example, if your home is covered for up to $350,000 and your deductible is 1%, you’d be on the hook for up to $3,500 if you filed a claim. Percentage deductibles tend to start around 1% and go up to 10% of the total home coverage value. The higher the percentage, the lower your monthly premiums — but consider that even 3% of that $350,000 total is $10,500. Again, it’s a balancing act.

What Is a Disaster Deductible?


It’s important to bear in mind that standard homeowners insurance policies don’t cover everything. Generally, eligible claims are limited by the named perils in your policy document — perils that include vehicular damage, theft, falling objects, and many other occurrences, but not major disasters like earthquakes, hurricanes and floods.

If you live in an area prone to these events, you’ll likely need to purchase additional insurance coverage specifically in case they occur — and the deductibles for these disasters work a little differently than standard homeowners deductibles do. Always review your insurance paperwork to ensure you know exactly how your policy works, but here are some general rules around what you might expect when it comes to disaster deductibles.

•  Hurricane deductibles may be a reality in your life if you live along the Atlantic coast, especially in states like Florida and Louisiana that are very prone to these massive storms. It’s complicated, though, because most standard homeowners insurance policies do cover some amount of wind and storm damage — so the deductible you’ll be responsible for will depend on how the insurance company assesses and documents the damage. In many cases, hurricane insurance requires policyholders to have a percentage deductible rather than a flat deductible, which could mean higher out-of-pocket expenses if extreme damage occurs.

•  Wind damage deductibles may apply to those who live in Tornado Alley and other areas that frequently experience extreme windstorms. Similar to hurricane insurance, most standard homeowners policies do include some wind damage coverage, so your experience will depend on how the damage is coded by the insurer. This type of insurance is another where the deductible is typically paid in a percentage (usually 1%-5% of the total home insurance coverage value).

•  Flood insurance deductibles vary by state and insurance company, and you’ll likely be able to choose between a flat deductible and a percentage deductible. Even if you don’t think you live in an area that’s particularly prone to floods, you might consider purchasing this additional insurance, which is not included in most standard homeowners policies. According to the Insurance Information Institute , approximately 90% of natural disasters in the United States involve flooding, which can cause catastrophic (and very expensive) damage quickly.

•  Earthquake insurance deductibles vary depending on your state and location, but are another that is paid by percentage — a percentage that might be as high as 20% of the replacement value of your home. States with high earthquake risks may set a minimum deductible of 10% of the home replacement value, which is expensive… but a lot less expensive than rebuilding the whole home yourself out-of-pocket, which you might just have to do in the case of a serious earthquake.

Recommended: Is Homeowners Insurance Required to Buy a Home? 

How to Choose the Right Deductible


Now that we’ve covered different homeowners insurance deductibles, we come to the fun (or not-so-fun) part: how do you figure out which type and level to choose?

Understanding How Your Deductible Affects Your Premium


As with all insurance products, the basic equation comes down to how much you can afford to pay on a regular, ongoing basis versus how much you might be able to afford to pay in the event you need to file a claim.

Higher deductibles mean lower premiums, but more out-of-pocket costs when something goes wrong. On the other hand, higher premiums might be harder to keep up with month to month but mean that in the event of a disaster, you’re more likely to have fuller coverage.

Keep in mind, too, that your home is likely to be your single largest asset; losing it (or seeing its value depreciate steeply) could quickly decimate your overall financial wellness and net worth. For that reason, it’s usually a good idea to opt for fairly substantial homeowners insurance coverages, even if you’re not required to do so by your mortgage lender.

Recommended: Homeowners Insurance Coverage Options to Know

The Takeaway


A homeowners insurance deductible is the amount of money the insured is responsible for in the event that a claim is filed. It’s separate from the premiums the insured party pays to keep the policy active. However, deductibles and premiums are related: generally speaking, the higher the deductible, the lower the premium, and vice versa.

Pretty much all types of insurance hinge on this monetary balancing act — but because of how financially catastrophic certain events can be, it’s usually worth paying overtime to ensure someone’s got your back if disaster strikes.

The same can be said, for example, of life insurance — which SoFi has partnered up with Ladder to offer to our members at affordable prices. Getting life insurance coverage can help ensure the people who matter most to you are covered in case something happens to you.

SoFi can help you get a life insurance quote in a matter of minutes.

Photo credit: iStock/Lordn


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.
SoFi offers customers the opportunity to reach the following Insurance Agents:
Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.

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How Much Homeowners Insurance Do I Need?

How Much Homeowners Insurance Do You Need?

Buying a house, for most of us, is the single largest purchase we’ll ever make — which is exactly why having the right amount of homeowners insurance is so important. “How much home insurance do I need?” is a common question that new homeowners ask themselves, and ultimately, the answer depends on factors like your risk tolerance, the requirements of your mortgage lender and how much you can afford to spend on premiums.

Let’s dig into the details so you can better assess the right amount of dwelling coverage and content coverage when it comes to your homeowners insurance policy.

Choosing the Right Dwelling Coverage

Homeowners insurance, broadly speaking, covers three separate categories: the home itself (or dwelling), the belongings inside your home and liability claims you may be vulnerable to if someone gets hurt on your property. We’re going to start with the first category: dwelling coverage.

Dwelling usually refers not only to your home itself, but also to attached structures, such as porches or garages. Outbuildings, or ADUs, may also be covered, but it’s important to check with your individual insurer, and to keep in mind that they may be covered at a lower rate than the primary dwelling.

Your dwelling is covered against damage that comes from specific perils, which will be named in your policy paperwork. It’s important to understand that not all damages are eligible for repair or replacement if they’re not one of the named perils in your policy.

Here are the common perils covered by most homeowners insurance policies, per the Insurance Information Institute:

•  Fire or lightning

•  Smoke

•  Windstorm or hail

•  Explosions

•  Damage caused by riots or civil commotion

•  Damage caused by vandalism or malicious mischief

•  Damage caused by aircraft, cars or other vehicles

•  Theft

•  Volcanic eruptions

•  Falling objects

•  Damage caused by the weight of snow, ice or sleet

•  Water damage from within the home

However, there are certain types of natural disasters and damages that are not covered under most standard homeowners insurance policies, some of which are important to purchase riders or endorsements for, such as:

•  Flood damage

•  Earthquake damage

•  Maintenance damage (such as damage due to mold or pests)

•  Sewer backups

Once you know which perils are covered by your policy, you can figure out how much coverage you need.

Recommended: Homeowners Insurance Coverage Options to Know

Standard Dwelling Coverage


Generally speaking, you want enough dwelling coverage to fully replace your home in the event it would need to be rebuilt. Importantly, that figure is not the same as your home’s value; the replacement cost may be higher or lower than your home’s value depending on its condition, location, and the price of building materials in your area.

This is a hard number to pin down for sure, but your insurance company or an appraiser can help you make an educated guess. Additionally, you’ll want to review this number yearly, as it can change over time as the price of local labor and materials shifts and it’s critical to assess how much dwelling coverage you need.

Buying Better Dwelling Coverage


While standard dwelling insurance should cover the full cost of replacing your home (in the event that it’s damaged by covered perils, don’t forget), there are additional levels of coverage that could be helpful under certain circumstances.

For instance, if there’s a storm or other local disaster that means many homeowners will be in need of repairs at the same time, the cost of labor and materials might skyrocket thanks to good ol’ supply and demand.

You might consider one of the following options, that are offered by some, but not all, homeowners insurers:

•  Extended replacement cost, which offers from 10% to 100% of additional, extended coverage to account for a spike in building costs.

•  Guaranteed replacement cost, which, as its name implies, guarantees that the full replacement cost of your home will be covered, regardless of price.

Of course, these additional coverages will come at an additional monthly premium cost.

Choosing the Right Contents Coverage


After your dwelling is covered, it’s time to move on to the stuff you keep inside it. Your contents coverage, or personal property coverage, is what you’ll rely on if you need to replace your belongings — from the clothes hanging in your closet to the food waiting in your fridge, and everything in between.

Sounds pretty great, right? The problem is, few of us actually have a handle on what exactly we own. In order to ensure you have enough personal property coverage, it’s a good idea to make an actual inventory of your possessions, or at least go through every room of your home and take photos of high-value items like electronics.

Certain high-value items, like jewelry, musical instruments, rare art or sports equipment, may require the purchase of additional coverages and should be kept on a separate inventory list.

Replacement Value for Better Protection


You may be offered “actual cash value” for your personal property, but if your insurer offers it, it’s a good idea to upgrade to “replacement value.” That way, you’ll be paid out for the actual cost of replacing your items, rather than for their cash value — which may be less than their actual cost to replace them thanks to inflation and other factors.

Adjusting Your Contents Coverage


Just as with your dwelling coverage, you want to ensure you’re regularly adjusting your contents coverage to ensure it’s up to date with what you actually own.

Personal property coverage is generally expressed as a percentage of your dwelling coverage — so if your home is covered for $400,000, and you have 50% in personal property coverage, you’d be paid $200,000 to replace your belongings. You can, however, adjust this figure up (or down), and you may want to do so.

Theft Limits


Also be sure to look out for “theft limits” in your policy, which may put a cap on how much certain high-value categories of items can be covered in the event of theft. For instance, jewelry may only be covered up to $1,500 in the event of theft, which is exactly why you want to document your high-value items and potentially buy extra coverage for them.

“Open Peril” Coverage for Belongings


Remember those perils we talked about above? Just like your dwelling coverage, your personal property coverage only extends to damages or losses due to those named perils. However, some insurers offer an “open peril” coverage option for belongings, which will cover replacement in any event. (Always be sure to read the fine print of your policy to make sure you know how your coverage works, however.)

Recommended: Is Homeowners Insurance Required to Buy a Home? 

Getting Better Liability Insurance


Finally, homeowners insurance also covers you in case you’re sued by someone who gets hurt on your property — for instance, someone who’s bitten by your dog or gets drunk at a party and falls on the steps. It might seem like a long shot, especially if you trust your friends, but you never know when someone might suddenly face major medical expenses… or decide to sue you.

Those kinds of costs can rack up quickly, so it may be a good idea to adjust up from the “standard” coverage of $100,000. Many personal finance experts suggest ensuring you have enough liability insurance to fully cover your assets — which is to say, the value of your home and all your other possessions, as well as the money you have in the bank.

Recommended: Personal Liability Insurance Coverage

Getting Sufficient Loss of Use Coverage


Finally, homeowners insurance can also cover the living expenses you’ll rack up while it’s in the process of being repaired or rebuilt. That process can take time — and living on restaurant meals and hotel rooms can be costly.

Generally, loss-of-use coverage comes in at about 20% of your dwelling coverage as a default, but think carefully about whether or not you might want to adjust that figure up, especially if you live in an expensive city.

The Takeaway


The exact amount of homeowners insurance you need will depend on both your personal risk tolerance and the requirements of your mortgage lender — not to mention, of course, the monthly premiums you can afford.

While your home might be your single biggest purchase, it’s not the most valuable thing in your possession. That privilege belongs to your life itself. And while you can’t put a dollar value on your life, you can help ensure the people you’d leave behind, if something happened to you, will be comfortable and taken care of in your absence.

Sound overwhelming? Don’t worry — SoFi can help! We’ve teamed up with Ladder to bring our members competitive, simple-to-understand life insurance products that will put your mind at ease. Plus, they take only minutes to set up.

Photo credit: iStock/PeopleImages


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi offers customers the opportunity to reach the following Insurance Agents:
Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.

Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

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Personal Liability Insurance Coverage

Personal Liability Insurance Coverage

Think your homeowners or renters insurance policy is just about covering your physical home and the stuff inside it? Think again. Most homeowners and renters policies include personal liability insurance coverage, as well — an important type of coverage that can really come in handy if you end up needing it.

Personal liability insurance coverage pays out in the event someone is accidentally hurt or has their belongings damaged on your property, as well as accidental property damage that you or your family may inflict on someone else outside your home. Personal liability coverage helps keep you from paying out of pocket for legal fees and medical bills that can arise from these situations — which can avert a financial catastrophe, given how expensive those costs can be.

Read on to learn more about this important type of insurance coverage and how to ensure you have it (and enough of it, at that).

What Is Personal Liability Insurance?


Now that we’ve got a basic definition of personal liability insurance — insurance that covers expenses you may be liable for in case of accidental injury or damage — let’s take a look at an example.

Say you have a friend over at your house and they accidentally fall down the stairs into your basement, breaking their ankle (and getting really freaked out) in the process. Even a good friend might sue you for damages under these circumstances, not least because medical expenses are so, well, expensive. If your friend doesn’t have medical insurance, the broken ankle alone might cost them up to $2,500 if it’s a simple break that requires a cast… or orders of magnitude higher if it requires surgery.

Chances are you don’t have thousands of dollars to pay out of pocket for your friend’s medical bills, not to mention any legal fees you might incur if they should decide to actually bring you to court on top of all that. Personal liability insurance can come to the rescue here, paying out up to your coverage limit so your assets are protected.

Along with accidental injuries that occur in your home or on your property, personal liability insurance can also protect you from accidental damages perpetrated by your family. For example, maybe your 12-year-old boy accidentally throws a football through your neighbor’s window (oops), shattering the glass and also breaking an expensive picture frame in the process. Personal liability insurance can payout in this instance, too. Phew!

What Does Personal Liability Insurance Cover?


Personal liability insurance can certainly be a godsend in applicable situations, but it doesn’t cover everything. You should always review your policy information to ensure you know exactly what’s covered by your specific plan, but generally speaking, here are the types of expenses personal liability insurance covers:

•  Medical bills incurred by visitors who accidentally get injured at your home or as a result of your negligence

•  Legal fees incurred if a visitor sues you for injury or damages to their property

•  Actual property damage sustained by a visitor to your home, or as a result of your negligence

•  Bodily injury and property damage caused by your pets or children, both on and off your home property

As with most other forms of insurance, even covered damages can only be paid up to the given limit written into your policy. For many homeowners insurance plans, that limit is $100,000 per occurrence at a minimum, though there may be specific clauses about how those monies are paid out (more on this in just a minute when we discuss medical payments).

If you decide you need additional coverage, you may be able to obtain it through your homeowners or renters insurance policy (though it may drive up your premium cost). You might also choose to purchase an umbrella insurance policy, which extends your personal liability coverage substantially. Umbrella insurance can be a good idea for those with high net worths or who are at high risk of a personal liability claim.

Recommended: What Is Renters Insurance and Do I Need It?

Medical Payments


Most personal liability policies will pay out for the medical expenses of people accidentally injured on your property, even if they don’t sue you for those damages (or you’re not otherwise legally obligated to pay).

However, these medical payments come with their own limits, which may be as low as $1,000 per person. Again, you may be able to purchase higher amounts of coverage, but it’s important to thoroughly review your insurance policy to understand exactly what you’re getting.

Recommended: Beginner’s Guide to Health Insurance

What Is Not Covered by Personal Liability Insurance?


We’ve talked a lot about what personal liability insurance covers. But what, specifically, is excluded?

Personal liability insurance does not cover:

•  Injuries or property damages caused intentionally by you or your family — liability insurance is for accidents only

•  Liability resulting from a car accident — that’s what car insurance is for!

•  Accidental injuries or damages you or your family sustain in your own home

•  Any bodily injury or damage that occurs as a result of business or professional activities, even if those activities are occurring in your home (that’s why you need a separate business insurance policy)

Of course, the list of what’s not covered by a personal liability insurance plan is always going to be substantially longer than the list of what is covered. If you have questions about your coverage, speak with your insurance agent directly or refer to your policy documentation for full details.

What Else You Need to Know About Personal Liability Insurance

Like other portions of your homeowners or renters insurance policy (or any policy, for that matter), when it comes time to file a personal liability claim, you may still be responsible for some of the expenses. This is called the deductible, and it’s the amount you pay out-of-pocket to cover the damages you’re filing the claim for.

Many homeowners insurance policies have a deductible of $1,000. So, for example, if you’re held accountable for $30,000 of medical and legal fees resulting from a personal liability claim, you’d pay $1,000 and your insurance company would pay $29,000 toward those expenses.

The deductible is separate from the premium cost you pay on a monthly, quarterly or annual basis simply to keep the policy active. And while it may feel like a burden, even a high deductible is a way better deal than having to pay for the entire cost of the damages out of pocket in most cases.

The Takeaway


Personal liability insurance is a type of coverage that protects your assets by paying for bodily injury and property damage accidentally sustained by visitors to your property (or perpetrated by you or your family off your property). This type of coverage is generally baked into a homeowners or renters insurance policy, though you can also purchase additional umbrella insurance coverage to extend your personal liability limit.

While personal liability coverage — and homeowners/renters insurance as a whole — is certainly an important kind of protection, it’s not the only one you should rely on. If you have family members and loved ones who rely on your earnings, you should consider purchasing life insurance, which will help ensure they’ll continue to be taken care of should something happen to you.

SoFi has teamed up with Ladder to offer competitive, easy-to-understand life insurance policies that range from $100,000 to $8 million, and we’ll even help you draft your will and estate plan for free. We don’t require medical tests for eligible applicants, so you can get a decision in minutes — today.

Get your life insurance quote in just minutes.

Photo credit: iStock/Edwin Tan


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.
SoFi offers customers the opportunity to reach the following Insurance Agents:
Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.

Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

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