Homeowners Insurance Coverage
Homeowners policy provides financial protection in the event that your home or its contents are damaged. It also provides protection if you or a family member are held legally responsible (liable) for injuries to others or damage to their property. It's also required by most mortgage lenders. Your Homeowners policy protects the following:
- Your home – from the most common causes of loss
- Other structures on your property – nonattached garages, tool sheds, etc.
- Personal belongings (anywhere in the world) – furniture, clothing, appliances, etc.
- Your living expenses – when damages force you to leave your home while it is being repaired or rebuilt
- Liability claims – claims against you for bodily injury and property damage
- Medical payments to others – pays nonhousehold members accidentally injured on your property
Types of Insurance Policies:
There are different types of insurance policies that cover your home. They range from a basic policy, to those that will provide a much broader range of protection. Most homeowners insurance policies will cover damage caused by such perils as fire, windstorms, hail, lightning, theft or vandalism. There are other homeowner policies that cover additional perils as well. Typically, floods, earthquakes, sinkholes, wear and tear, and intentional acts are excluded in all policies. It's important to talk to your agent to learn what your policy may and may not cover. And for those perils that are not covered, there may be supplemental insurance you can purchase.
The Amount of Insurance:
The amount of insurance you buy (your coverage limit) starts with your dwelling coverage, which is the amount needed to fully rebuild your home in the event you suffer a total loss. It is important to point out that your home’s replacement cost at current prices could be higher than its actual market value. Your agent can calculate a cost estimate to rebuild your home based upon its living area, style, construction, number of rooms, garage and its special features.
Personal Property & Other Structures:
The policy’s coverage for other structures, personal property and loss of use are provided as a percentage of your dwelling limit. For instance, your personal property limit is generally 50 percent of your dwelling limit (other structure limit is provided at 10 percent of dwelling, loss-of-use limit is 20 percent). Therefore, when you purchase a $300,000 limit for your dwelling, your personal property limit is $150,000 (or 50 percent). You can increase any of these base limits.
A deductible also applies to property losses. The deductible is the amount you would pay out of your own pocket before the insurance policy provides coverage. For instance, if you purchase a $1,000 deductible, then you will be responsible for paying the first $1,000 of a claim. You can save premium by selecting a higher deductible option.
For your personal liability coverage, you can select the limit of coverage. Policies typically have a $100,000 minimum limit on personal liability, but you can choose a higher limit. Similarly, policies typically have a $1,000 minimum limit for medical payments coverage, with higher limits available for purchase. There is no deductible for personal liability. Your agent can help determine which limits are best for your situation.
There are some classes of property that have specialized limits of coverage for some or all claims. If you have extraordinarily valuable items in your home—antiques, oriental rugs, jewelry, guns, musical instruments, fine art, coin or stamp collections, or other types of high-value items—you should obtain an endorsement to your homeowners policy that specifically covers these items. It's important to keep an up-to-date inventory of your personal possessions. Your inventory should include a brief description of the serial and model number, and the cost. It can also include photographs or videos of the items. Be sure to attach any receipts that you have for the items to your inventory, and to keep your inventory in a safe place such as a fireproof security box or safe, bank safe deposit box, or with a trusted member or friend.