Insurance
Understanding Basic Homeowners Insurance
There are four standard areas covered
by your regular homeowner's policy
Your home’s
physical structure
Your personal belongings
inside the home
Liability
protection
Coverage for additional
living expenses
Your Declarations Page
Includes policy period and premium
Includes coverages, property, and liability limits
Deductibles – the part of the insurance claim you are responsible for when you file a claim. Pay attention to deductibles that vary depending on the perils causing the damage. For example, a wind and hail deductible maybe be different than the standard deductible. Some insurance companies are now applying different deductible based on the age of roofs.
Includes loss settlement provisions. Replacement cost loss settlement covers the cost of repairing damage with no deduction for depreciation. Actual cash value loss settlement provisions deduct depreciation from the payout.
Includes forms, options, exclusions, and endorsements
And remember - your insurance policy is a contract; be sure you read it and understand it before you sign it so there are no surprises when you go to make a claim later
Let’s Break Them Down!
Coverage for the structure of your home
Your policy should pay to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning, or other disasters listed in your policy
Detached structures such as a garage, tool shed, or gazebo are covered in some policies as well – again check with your agent and read your policy carefully
It is important to note: a standard policy will not pay for damage caused by a flood, earthquake, or routine wear and tear. When purchasing coverage for the structure of your home, remember this simple guideline: Purchase enough coverage to rebuild your home
Coverage for your personal belongings
This covers things inside your home like furniture, clothes, sports equipment, and other personal items that are stolen or destroyed by fire, hurricane, or other insured disasters
The coverage is generally 50 to 70 percent of the insurance you have on the structure of the house. You should conduct a home inventory to see if this is enough coverage for you
Note: Personal belongings coverage includes items stored off-premises—this means you are covered anywhere in the world. Some companies limit the amount to 10 percent of the amount of insurance you have for your possessions- again check and read carefully before signing your policy!
Remember that expensive items like jewelry, furs, art, collectibles, and silverware are covered, but there are usually dollar limits if they are stolen. You may wish to purchase additional insurance to cover those items fully
Liability protection
Liability is legal protection for you in case of lawsuits for bodily injury or property damage that you or family members cause to other people
It also pays for damage caused by your pets. For example: if a child or pet of yours ruins someone’s property, you are covered. The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit stated in your policy documents- so again, check your policy
While liability protection also provides no-fault medical coverage for someone injured in your home. But please note, it does not pay the medical bills for your own family or your pet
Additional living expenses (ALE)
Additional living expenses pay any additional costs of living away from home if you cannot live there due to damage from an insured disaster
This coverage takes care of hotel bills, restaurant meals, and other costs, over and above your usual living expenses, incurred while your home is being rebuilt
ALE does have limits, however, and some have time limits – talk to your agent and understand what, if any, restrictions there are in your ALE portion
For more information on homeowner’s insurance, you can check out a detailed publication created by the National Association of Insurance Commissioners.