How Much Auto and Home Insurance Do You Actually Need?
Insurance is not simply about owning a policy. It is about carrying enough protection to prevent an accident, lawsuit, fire, or storm from becoming a financial crisis. In the recent episode of Fully Covered, host Mike Downer speaks with Absolute Insurance Agency President and CEO Jeff Eastvold and Vice President Dan Bell about liability limits, replacement cost, umbrella coverage, policy gaps, and the common question: does bundling auto and home insurance save money? Their key message is clear: coverage should reflect your assets and risks, not just the lowest premium.
Why Can Minimum Auto Insurance Limits Leave You Exposed?
State-required limits are a legal baseline, not a guarantee of complete financial protection. Bell explains that low bodily injury and property damage limits can disappear quickly when a crash causes serious injuries or damages newer vehicles.
As Eastvold says, if your policy pays only part of the damage, “then you pay the rest.” That difference may come from savings, income, or assets. The Iowa Department of Transportation confirms that motorists must maintain liability coverage under Iowa’s financial responsibility laws. However, satisfying the law does not mean the limits match your actual exposure.
The commonly discussed 100/300/100 structure provides $100,000 per injured person, $300,000 per accident for bodily injury, and $100,000 for property damage. The guests caution that even these limits may not cover every major multi-vehicle accident.
Why Should Homeowners Coverage Reflect Rebuilding Costs?
Homeowners insurance should generally focus on the cost to reconstruct the house, not its sale price, tax assessment, or mortgage balance. Market value includes land and neighborhood demand, while replacement cost considers labor, materials, square footage, style, and home features.
The National Association of Insurance Commissioners advises homeowners to insure a residence for its full replacement cost and notes that replacement cost and market value are different. Bell says agents use property details to estimate rebuilding expenses and may recommend extended replacement-cost protection above the stated dwelling limit.
Paying off a mortgage does not remove the risk. It only removes the lender’s requirement. A covered fire, storm, or liability claim can still threaten one of your largest assets.
What Homeowners Policy Gaps Should You Review?
A basic policy may not include every protection a homeowner expects. Bell highlights endorsements for water backup, service lines, mechanical breakdown, and replacement cost on personal belongings.
For example, FEMA’s urban flooding guidance notes that homeowners insurance may cover some water losses but may not cover sewer backup or surface flooding. Coverage depends on the policy, endorsements, exclusions, and cause of loss.
This is why the guests recommend reviewing the contract with an agent rather than assuming every type of damage is included.
When Does an Umbrella Policy Become Valuable?
An umbrella policy adds liability protection after the applicable limits of an auto, homeowners, or other underlying policy have been exhausted. Depending on its terms, it may also help pay certain legal defense expenses.
The NAIC’s umbrella insurance guidance explains that this coverage can pay liability and defense costs beyond what a primary policy covers. Eastvold describes it as a cushion around a client’s assets. Households with growing savings, income, property, or recreational vehicles may have stronger reasons to consider it.
How Do Agents Determine the Right Coverage?
There is no single package for every household. Absolute Insurance Agency starts with a conversation about the client’s home, vehicles, assets, lifestyle, and financial position. The goal is to identify realistic risks and decide how much loss the client could comfortably retain.
Bell emphasizes that the process is not “cookie-cutter.” Two households with similar homes may need different limits because their drivers, vehicles, assets, property features, and tolerance for risk differ.
Can Bundling Improve Price and Protection?
Bundling may produce multi-policy discounts and make coverage easier to coordinate, although savings vary by company and household. Keeping auto, home, umbrella, boat, or recreational vehicle coverage together may also simplify claims when one event damages several insured items.
So, does bundling auto and home insurance save money? It often can, but the lowest bundled quote is not automatically the strongest option. Compare limits, deductibles, exclusions, endorsements, and total protection alongside the premium.
FAQs
How Much Auto Liability Insurance Should I Carry?
Carry enough to protect your assets and income from a serious at-fault accident. State minimums may be too low for your circumstances.
Is 100/300/100 Auto Coverage Always Enough?
No. It provides meaningful protection, but severe injuries or damage involving several costly vehicles can still exceed it.
Should Homeowners Insurance Equal Market Value?
Not necessarily. Dwelling coverage should generally reflect reconstruction cost, which can differ greatly from real estate market value.
Do I Need Homeowners Insurance Without a Mortgage?
Yes. It can still protect the structure, belongings, temporary living expenses, and personal liability.
What Does Umbrella Insurance Cover?
It generally adds personal liability protection above qualifying home, auto, and other underlying policies, subject to exclusions.
Are Sewer Backups Covered Automatically?
Often not. A water-backup endorsement may be needed, while flooding usually requires separate coverage.
When Should I Review My Policies?
Review them annually and after major purchases, renovations, new drivers, marriage, or substantial financial changes.
Mike Downer: Hello, everybody. I am your host, Mike Downer, and welcome to Fully Covered. Do you want cheap insurance, or do you want to be insured?
I am joined once again by Jeff Eastvold, president and CEO of Absolute Insurance, and Dan Bell, vice president of Absolute Insurance. How are we doing today, guys?
Jeff Eastvold: Great. Thanks for having us back.
Dan Bell: Doing good.
Mike Downer: You bet. We got to know a little bit about your insurance agency and a little bit about you guys on our last episode. Today, we’re going to dive a little more into the meat. We’re going to talk about how much car and home insurance I actually need.
So my main question for you today, guys, is: What is the right coverage amount for my auto and homeowners insurance? And how do I know I’m not overinsured or underinsured?
Jeff Eastvold: Well, that’s a tough one. Do you want to be insured or not insured, right? We have to look at how many assets you have. We look at your house value and your assets, and we try to figure that stuff out. We just want to make sure that if you have a car accident, I don’t want you to call me and say, “I don’t have enough insurance.”
Dan Bell: One hundred percent. It’s the million-dollar question, right? What is the appropriate amount of insurance? Well, it’s at least one dollar more than what the claim is.
Mike Downer: That’s a great answer. You killed that. That was great.
Dan Bell: That’s what we need it to be. It needs to be right at that level.
In Iowa, the minimum limits are $20,000 per person, $40,000 per occurrence, and $15,000 for property damage.
Mike Downer: Is that for car insurance?
Dan Bell: Car insurance, yes. That’s bodily injury. Think about that: $20,000 per person and $40,000 per occurrence.
Jeff Eastvold: I think the easier thing to think about is this: if you hit somebody’s car, the most they’re going to pay is $15,000 for all the cars.
Dan Bell: Yeah. Who’s driving around a $15,000 car?
Mike Downer: Well, not many.
Dan Bell: Exactly. Not very many people.
Jeff Eastvold: So if you hit a $25,000 car, the insurance pays $15,000, and then you pay the rest.
Mike Downer: You’re done.
Dan Bell: So that’s the key to that kind of thing right there. People say, “I’ve got insurance.” They don’t know if they have that number. They don’t know what that number is. That’s what we try to help people explore.
You might need something more than $15,000. Is $50,000 enough? Is $100,000 enough for property damage? What does it cost more? Ten bucks? Twenty bucks?
Jeff Eastvold: Exactly. Just being insured, right? Or not being insured at all.
Mike Downer: Yeah, because when it comes to paying out of your own pocket, I know the general population doesn’t have $60,000, $80,000, or $100,000 just sitting there waiting to pay somebody else because they accidentally turned a corner the wrong way.
So that’s just my guess. Maybe I’m in the minority. Maybe I’m the only guy who doesn’t have $100,000 just sitting around waiting to pay somebody. “Here you go.”
So, on a different subject, why should homeowners insurance be based on replacement cost rather than market value?
Dan Bell: Well, that’s easy. You’ve got all these different values attached to your home, right? You have your assessed value, which is what the taxes are going to be based on. You have market value, which is what you can sell it for. And then you have, “Oh my gosh, there’s a fire, and I need to rebuild this thing.”
Well, that’s the only number I really care about. That’s the number that matters.
So we put it through systems that determine the cost per square foot based on the characteristics of your home, the year it was built, the style, and things like that. That generates a pretty close estimate, because that’s what it is. We don’t know when the thing is going to happen. This could very well happen to you.
We need to get that as close as possible to what the replacement cost is. Then, when you work through independent agents, we make sure there are actually extensions on that replacement cost. If it’s going to take an extra 25% or 50% more than what’s listed on that policy to rebuild it, that’s what we want to make sure of. We want your house to be rebuilt the way it was, with like kind and quality, prior to the catastrophe.
Mike Downer: Perfect. So let me ask you another question. How do homeowners insurance needs differ if you’re still paying on a mortgage rather than owning your home outright?
Dan Bell: There’s a requirement in most cases with loans. If it’s federally backed or anything like that, they’re going to require you to carry insurance on that collateral.
If you own it outright, then you don’t have that requirement, but you still have an impetus to carry coverage just to protect it. It’s often said that a home is the biggest asset in a client’s life. Well, you still want to protect that. It still makes sense.
It also offers a discount on the auto. And if you add an umbrella on top of that, you get stacking discounts on top of these things. So that makes complete sense.
Just because you don’t have a mortgage doesn’t eliminate your need to have protection, whether on the property side or the liability side. The liability side can be even more drastic.
Mike Downer: Yep. I understand that catastrophes don’t care whether you have a mortgage or not.
Dan Bell: Exactly.
Mike Downer: So, guys, we’re going to go back to auto insurance here for just a second. Why is the 100/300/100 coverage often recommended as a general rule for auto liability?
Dan Bell: I don’t know. It’s what has been out there for years and years. I mean, it’s better than state minimums, but it’s not necessarily enough.
Again, $100,000 for property damage—if you total two cars out there on the road right now, you could be sitting at $120,000, $150,000, or more that needs to be paid out to the other parties.
Jeff Eastvold: Yeah. $15,000 is not enough.
Dan Bell: It all depends. One of the things in one of the classes I was in was about the umbrella policy, which was introduced in the late ’70s. It’s a policy that provides additional liability over the top of your auto and home. Once those liability limits are exhausted, you can get additional coverage.
They asked in that class, “What was the minimum level for the umbrella back in the late ’70s?” In my mind, I was thinking, “Oh, it had to be half a million dollars.” But no, the minimum level back in the ’70s was $1 million. And that’s still a primary driver for selling an umbrella today.
When you look at inflation and how drastically things have gone up since the ’70s, we really need to be exploring these higher limits to protect assets.
Mike Downer: I agree. I agree.
So how does umbrella insurance help when your auto or home insurance limits are exhausted? Explain that to us. I know you brought it up, but let our listeners know how it helps when everything else is exhausted.
Jeff Eastvold: Once that’s used, then the umbrella comes in for whatever the new limit is at that point, right? So let’s say it is $1 million. After you’ve used your auto, which will most likely be $250,000 or half a million dollars, then it immediately goes into the umbrella policy to help protect your assets from having to pay for that incident.
Again, this is just another way to put a cushion around your assets so they’re not brought into a lawsuit and things like that.
Dan Bell: A lot of policies have liability limits that end at $500,000, if you have $500,000. So the umbrella kicks in for another million. Then you have $1.5 million total.
Mike Downer: Exactly. No, that makes complete sense.
So how does your net worth affect the amount of insurance protection you may need or want to buy?
Jeff Eastvold: That’s tough.
Dan Bell: The more money you have, the more you need to care, because ultimately, if something were to happen where you’re at fault and they know you have a high net worth, then those injuries might become worse.
Mike Downer: Yeah, I completely understand that. You see the commercials all the time, and I will not mention any names, but I’m sure everybody knows exactly what I’m talking about. There are three or four around our area in Des Moines, Iowa, that I’m sure you guys know exactly what I’m talking about.
Do you want to be covered, or do you want to be cheap? Right? So, yeah, definitely, they want to be protected.
Dan Bell: People of high net worth and people of medium net worth need protection because it’s easier to go after somebody else’s money than make your own.
Mike Downer: Oh, it sure is. It sure is.
So, guys, how do you as Absolute Insurance agents determine the right coverage for each customer?
Jeff Eastvold: Through interviews and talking with them.
Dan Bell: Yeah. Getting some of their background.
Jeff Eastvold: We like to have a personal relationship with the client, right? Just me and you. Let’s figure it out.
Dan Bell: Then we problem-solve from there. It has to do with meeting the client where they’re at and understanding where they’re at in their life and how we can help with that.
Mike Downer: Yeah, I like that approach because I can tell you that I have friends I know personally who need a lot more insurance than I ever will, and I have some friends who will never need as much as I do.
So getting to know people is extremely important. I love the fact that you guys take that approach to helping your clients through an individual needs analysis rather than just putting everybody in one generalized bucket, or even two generalized buckets.
Dan Bell: Right. There’s nothing cookie-cutter about it.
Mike Downer: Right. That says a lot about your business, why you guys have been in business for so long, and what you guys are doing.
So what are some of the common mistakes that can leave people exposed to costs that are going to cost them money?
Dan Bell: The biggest one is the minimum-limit scenario. Even if it’s not minimum limits, Iowa state minimums are $20,000 per person and $40,000 per occurrence for bodily injury. That’s way too low. $15,000 for property damage is one of the biggest drivers.
I would say another common mistake is buying base policies. When you go online and buy a home insurance policy, it’s unendorsed. An unendorsed homeowners policy has a lot of gaps in coverage.
It’s best to have a conversation about your particular house with somebody who knows home insurance and can suggest various endorsements to add coverage that might not exist, like water backup of sewers and drains. Is that necessarily built into a policy? It’s not. It’s actually excluded from a policy but can be bought back through that endorsement.
There’s also inland flood, mechanical breakdown, and service line coverage. Service line coverage is kind of a newer one. For example, if the line between the city hookup and your house collapses, that could be covered.
Jeff Eastvold: Replacement cost on contents.
Dan Bell: Right. Replacement cost on contents.
Jeff Eastvold: Online, it just strips everything out. That’s why it’s cheaper, because it’s just garbage.
Dan Bell: Correct.
Mike Downer: Yep. This is only our second episode, and we’re just kind of scratching the surface on all this, but the three of us are definitely going to sit down and have a nice little chit-chat, guys. I’m sure that by the time we hit podcast number ten—or before—I’ll be able to give you a personal endorsement.
Dan Bell: We’ll do it.
Mike Downer: You guys are making me think here.
Like I said, we’ve got a lot to cover over the next few episodes. Let’s wind this one up with a big question, and this will lead us into other subjects for other weeks.
How can bundling auto, home, and recreational vehicle coverage lead to better rates and stronger protection?
Dan Bell: Number one, there are generally price breaks or discounts. A lot of times, they will stack. You’ll get a certain discount for having the auto with the home. Then when you add the boat and the umbrella policy, they just keep stacking upon each other.
If you keep it all within the same company, there might even be other benefits you don’t think about. For example, perhaps there’s a common cause of loss where hail hits the boat, the cars, and the house. Now maybe you pay one deductible instead of multiple deductibles across the board.
Mike Downer: See, I’m learning more and more every day. You guys are just making me think.
Jeff Eastvold: A lot of people don’t have the right coverage. That’s not good.
Dan Bell: Yeah. Your policy needs it. $15,000 for the other person’s car, and it’s like, “Well, he had a $50,000 car.” You’re screwed.
Mike Downer: Yeah. I do love the fact that, like I said, our first couple of episodes are introductory episodes, but this has given us a lot—and given me a lot of questions—to come up with here for the next few weeks.
We’ll start deep-diving into the nitty-gritty of all these things we’ve been talking about and really let you guys explain to people what they need and what they want to look for. Not that you’re putting anybody down or anything like that, but what they’re doing wrong, what they’re doing right, and knowing they can always give you guys a call. You’re always there to help them out and get it done the right way.
Dan Bell: Absolutely.
Jeff Eastvold: We’ll get into the fun stuff.
Dan Bell: Yeah, we’ll get into the nitty-gritty.
Mike Downer: Again, guys, it’s always a pleasure to talk to you. I look forward to learning more and more about insurance. I look forward to meeting with you guys. Again, I’m 99.9% sure that I’ll be giving you a personal recommendation before the end of any of these podcasts.
Dan Bell: Excellent.
Jeff Eastvold: Awesome.
Mike Downer: Guys, thanks again for joining me. We’ll talk soon.
Dan Bell: Thanks for having us again.
Mike Downer: You bet. Take care.