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Before you sign on the dotted line, be sure you have a full understanding of the limits of your homeowners insurance policy. Most standard homeowners insurance policies include four essential types of coverage:
- Coverage for your home’s structure
- Personal property coverage
- Liability protection
- Additional living expense coverage
As with any contract, it is best to read through all the material to ensure you have a thorough understanding of what your policy covers. Here is an overview of what you can generally expect from a typical homeowners insurance policy.
COVERAGE FOR YOUR HOME’S STRUCTURE
In most cases, a homeowners insurance policy will cover repairs to a home damaged or destroyed by a fire, storm, hurricane, or another natural disaster. Examples of disasters that are not typically covered include floods and earthquakes. Additionally, homeowners insurance does not typically cover routine wear and tear. Most policies include some coverage of detached structures such as garages, gazebos, or sheds. When considering homeowners insurance policies, be sure to purchase enough coverage to rebuild your home in case the need arises.
PERSONAL PROPERTY COVERAGE FOR YOUR BELONGINGS
In cases of theft, fire, etc., your insurance will usually cover furniture, clothes, jewelry, appliances, and other personal items. Personal property insurance coverage includes property stored off-premises as well as trees, plants, and shrubs. Some items, such as fine art and collectibles, may be subject to a dollar limit in the case of theft. Be sure to keep an extensive inventory of your personal items. Include photos and/or videos to prove the quality of the items. Keep receipts to prove ownership and value. Interested in learning more about protecting yourself from theft? Check out our article What to Know About Theft Claims!
Liability covers you against lawsuits for bodily injury or property damage that you, a family member, or a pet may cause to other people. The liability portion of your policy should cover the cost of defending you in court. Coverage and liability needs will vary according to various factors, and it is always a good idea to discuss whether you should purchase a higher level of protection with an insurance agent.
DISPLACEMENT AND ADDITIONAL LIVING EXPENSES COVERAGE
This coverage applies to costs incurred when you cannot live in your own home due to damage from an insured disaster. This includes expenses such as hotel bills and restaurant meals as well as items such as tarps that may be necessary to make your home habitable. Of course, coverage of additional living expenses often has limits, sometimes even a time limit. If you rent all or a portion of your home, additional living expense coverage might cover the rent you would have collected if the property had not been destroyed. Remember that additional living expenses are only covered when a displacement is the result of a covered loss.
A thorough understanding of your homeowners insurance policy will help you protect your home and belongings. Be sure to discuss your priorities and concerns with your insurance agent before deciding on a specific policy.