Every homeowner should have homeowners insurance coverage. This coverage provides financial protection against loss due to disasters, theft and other accidents. A standard policy includes coverage for your home, personal belongings, liability protection, and additional living expenses.
Most importantly, the policy helps repair or rebuild your home if it is damaged or destroyed. Your policy will specify which disasters it covers by the most common are fire, hurricane, hail, and lightning. The policy will also cover detached structures like a garage, tool shed or gazebo.
You can decide how much coverage you want. But as a rule, it helps to get enough coverage to rebuild your home. And a standard homeowners policy doesn’t pay for damage caused by a flood or earthquake. Coverage for those incidents is available separately.
Insured Personal Belongings
Personal belongings include furniture, clothes, sports equipment and other belongings. These items are covered if they are stolen or destroyed by an insured disaster, such as a fire. The coverage for belongings is usually 50 to 70 percent of the insurance you have on the house. But the best way to determine if this is enough coverage is to take inventory.
Once you have evaluated your belongings, you’ll have an idea about what everything is worth. Some policies also cover items you have stored off-premises, so note those items as well.
Your insurer might limit the amount available for personal belongings. So expensive items like jewelry, furs, art, collections, and instruments might require separate coverage. You can add a special personal property endorsement to insure expensive items.
Homeowners also covers trees, plants and shrubs, generally for about $500 per item. But this only applies if the greenery is destroyed during a covered event, such as a fire.
Liability Coverage for Homeowners
Liability covers you against lawsuits for injury or property damage you cause to others. It also pays for damages caused by a pet, child, or other family member. Liability pays the cost of defending you in court and any damages you’re ordered to pay. However, the policy only pays up to its limits. Anything over that amount is your responsibility.
If you have highly-valuable assets and want more coverage, then consider an umbrella or excess liability policy. These policies will pay once your existing liability is all gone.
No-fault medical coverage is also usually included. This means if someone in injured in your home, they can submit medical bills to your insurance company. This does not pay medical bills for your own family or your pet.
Additional Living Expenses
If your home is destroyed, then the policy will pay additional living expenses. This includes hotel bills, meals and other costs incurred while your home is rebuilt. Most policies place a time limit on additional living expenses.