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What is in a
standard homeowners
insurance policy?
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A standard
homeowners
insurance policy
includes four
essential types
of coverage.
They include:
- Coverage
for the
structure of
your home.
- Coverage
for your
personal
belongings.
-
Liability
protection.
-
Additional
living
expenses in
the event
you are
temporarily
unable to
live in your
home because
of a fire or
other
insured
disaster.
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1. The
structure of
your house
This part of
your policy 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 will not pay
for damage
caused by a
flood,
earthquake or
routine wear and
tear. When
purchasing
coverage for the
structure of
your home, it is
important to buy
enough to
rebuild your
home.
Most standard
policies also
cover structures
that are
detached from
your home such
as a garage,
tool shed or
gazebo.
Generally, these
structures are
covered for
about 10% of the
amount of
insurance you
have on the
structure of
your home. If
you need more
coverage, talk
to your
insurance agent
about purchasing
more insurance.
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2. Your
personal
belongings
Your furniture,
clothes, sports
equipment and
other personal
items are
covered if they
are stolen or
destroyed by
fire, hurricane
or other insured
disaster. Most
companies
provide coverage
for 50% to 70%
of the amount of
insurance you
have on the
structure of
your home. So if
you have
$100,000 worth
of insurance on
the structure of
your home, you
would have
between $50,000
to $70,000 worth
of coverage for
your belongings.
The best way to
determine if
this is enough
coverage is to
conduct a home
inventory.
This part of
your policy
includes
off-premises
coverage. This
means that your
belongings are
covered anywhere
in the world,
unless you have
decided against
off-premises
coverage. Some
companies limit
the amount to
10% of the
amount of
insurance you
have for your
possessions. You
have up to $500
of coverage for
unauthorized use
of your credit
cards.
Expensive items
like jewelry,
furs and
silverware are
covered, but
there are
usually dollar
limits if they
are stolen.
Generally, you
are covered for
between $1,000
to $2,000 for
all of your
jewelry and
furs. To insure
these items to
their full
value, purchase
a special
personal
property
endorsement or
floater and
insure the item
for it's
appraised value.
Coverage
includes
“accidental
disappearance,”
meaning coverage
if you simply
lose that item.
And there is no
deductible.
Trees, plants
and shrubs are
also covered
under standard
homeowners
insurance.
Generally you
are covered for
5% of the
insurance on the
house—up to
about $500 per
item. Perils
covered are
theft, fire,
lightning,
explosion,
vandalism, riot
and even falling
aircraft. They
are not covered
for damage by
wind or disease.
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Liability
protection
Liability covers
you against
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. So, if
your son,
daughter or dog
accidentally
ruins your
neighbor’s
expensive rug,
you are covered.
However, if they
destroy your
rug, you are not
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 of
your policy. You
are also covered
not just in your
home, but
anywhere in the
world.
Liability limits
generally start
at about
$100,000.
However, experts
recommend that
you purchase at
least $300,000
worth of
protection. Some
people feel more
comfortable with
even more
coverage. You
can 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.
Generally,
umbrella
policies cost
between $200 to
$350 for $1
million of
additional
liability
protection.
Your policy also
provides
no-fault medical
coverage. In the
event a friend
or neighbor is
injured in your
home, he or she
can simply
submit medical
bills to your
insurance
company. This
way, expenses
are paid without
a liability
claim being
filed against
you. You can
generally get
$1,000 to $5,000
worth of this
coverage. It
does not,
however, pay the
medical bills
for your family
or your pet.
As a homeowner, you should be aware of the Environmental Protection Agency (EPA) issued a new regulation to reduce lead paint dust, which took effect April 22. Many homeowners may begin performing repairs and renovations on their own, as do-it-yourself home renovations are exempt from this rule, which could affect the cost of homeowners insurance. Click here to learn more about this new EPA regulation.
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Additional
living expenses
This pays the
additional costs
of living away
from home if you
can't live there
due to damage
from a fire,
storm or other
insured
disaster. It
covers hotel
bills,
restaurant meals
and other living
expenses
incurred while
your home is
being rebuilt.
Coverage for
additional
living expenses
differs from
company to
company. Many
policies provide
coverage for
about 20% of the
insurance on
your house. You
can increase
this coverage,
however, for an
additional
premium. Some
companies sell a
policy that
provides an
unlimited amount
of loss-of-use
coverage, but
for a limited
amount of time.
If you rent out
part of your
house, this
coverage also
reimburses you
for the rent
that you would
have collected
from your tenant
if your home had
not been
destroyed.
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Information
Institute, Inc.
- ALL RIGHTS
RESERVED -
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