It’s your home and you want to protect it with the right homeowner’s insurance policy. To do this it’s important to understand what a standard homeowner’s insurance policy includes. There are four key components consisting of:
- Coverage for the structure of your home.
- Coverage for your personal belongings.
- Liability protection.
- Living expenses in case you are temporarily unable to live in your home due to a fire or other insured disaster.
1. Your house
This part of your policy generally pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disaster listed in your policy. It generally does not pay for damage caused by a flood, earthquake or just wear and tear. When purchasing coverage for the structure of your home, make sure to buy enough to rebuild your home. Also, review this coverage on an annual basis to make sure you have sufficient coverage.
2. Your personal belongings
Your furniture, clothes and other personal belongings are usually covered if they are stolen or destroyed by fire, hurricane or other insured disaster. Most companies provide coverage between 50% to 70% (this is just an average, every policy is different) of the amount of insurance you have on the structure of your home. The best way to determine if this is sufficient is to conduct a home inventory, in case you need to increase your coverage. If you have questions about what is covered by a specific policy, contact us.
This part of your policy may also include off-premises coverage, which means that your belongings are covered anywhere in the world, unless you have decided against this coverage.
Expensive items such as jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. To insure these special items to their full value, consider purchasing a special personal property endorsement or floater and insure these items for their appraised value.
Trees, plants and shrubs are also covered under standard homeowners insurance. They are protected against theft, fire, lightning, explosion, vandalism, riot and even falling aircraft. They are not covered against damage by wind or disease.
3. Liability protection
Liability protects you against lawsuits for bodily injury or property damage that you or family members cause to someone else. It also pays for damage caused by your pets. So, if your child or dog accidentally breaks something in your neighbor’s yard, you are covered. The liability portion of your policy also pays for both the cost of defending you in court and any court awards—up to the limit of your policy.
Liability limits generally start at about $100,000. Many recommend that you have up to $300,000 in coverage. Some people feel more comfortable with more coverage. You can also purchase an umbrella or excess liability policy which provides broader coverage, including claims against you for libel and slander, as well as higher liability limits.
Your policy also provides no-fault medical coverage. If a friend or neighbor breaks an ankle playing basketball in your back yard, he or she can simply submit medical bills to your insurance company. Expenses are paid without a liability claim being filed against you. You can generally get $1,000 to $5,000 worth of this coverage.
4. Additional living expenses
If your home is damaged because of a fire, storm or other insured disaster and you can’t live in it, this coverage pays the costs of living someplace else while your home is repaired or you find another place to live. While your home is being rebuilt, hotel bills, restaurant meals and other living expenses are covered. Coverage for additional living expenses differs from company to company.
Footnote: This is a brief overview of the coverage that can be included in a Homeowner’s Insurance policy. You should read a policy thoroughly before purchasing any insurance policy.