Standard Homeowners Insurance – How Are You Protected

Standard Homeowners Insurance – How Are You Protected
  • Opening Intro -

    Most homeowners take out home insurance just as a matter of routine without bothering to really find out and understand the extent of cover.

    This lack of knowledge inhibits their ability to extract the best from their investment when the occasion does arise.

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Generally, four types of cover are built into a standard homeowner’s policy; coverage for the home structure, for your personal belonging, protection against liability, and living expenses in case disaster forces you out of your home. A more detailed description:

Structure of the House

All homeowner’s policies will cover the cost of repairing or rebuilding your home in case it suffers damage or is even destroyed by any of the events listed in the policy such as storm, fire, lightning, hail and other disasters. Most of the policies also cover structures that are detached from the house like garages, gazebos or tool sheds; usually, the cover is limited to about 10% of the policy amount. However, normal wear and tear and damages caused by earthquake or flood are not included.

If the place you live in has been classified as being flood or earthquake prone, then you can ask for riders to your policy at an additional cost that will keep you protected. Depending upon the historical records and risk perception, your mortgage company could even make it mandatory for you to acquire such protection to safeguard the asset. Some insurers make flood coverage standard but allow policyholders to opt out while others limit the cover to predefined values that can be quite low. Still others do not cover flood as all.

Personal Belongings

Your home insurance policy covers your personal belongings too. These could be items like furniture, gadgets and appliances, clothes, fitness equipment, paintings, etc. The items will need to have been damaged by any of the events like fire or natural disasters that are listed in the insurance policy. Usually, the extent of coverage is anywhere between 50-70% of the coverage you have taken for the structure of the house. Determining whether the coverage is adequate or not is as simple as conducting an inventory of your belongings.

What most people do not often know is that the cover on personal belongings extends to items that are not in the house too. Credit cards are also covered against unauthorized use for up to $500. Very expensive items like jewelry have a claim limit if they are stolen but the full value cover can be obtained with a floater at additional cost. Even plants, shrubs and trees are covered though not against disease or wind damage.

Basic Home Insurance Information

Protection against Liability

This aspect of the homeowner’s policy covers you against legal cases by other people for any damage to their property or bodily injury caused by any action by your family members or pets. The cover is limited to the value of the policy but includes litigation costs as well as court awards. However, damage to your own property by your own pet cannot be claimed. Usually, liability limits begin at around $100,000, but if you feel it is worthwhile to get more cover, go ahead and purchase an excess liability policy that will provide higher limits as well as extra cover against other incidents, including libel and slander suits. Standard homeowner’s policies also provide medical cover for injuries others may sustain in your home. A claim can just be made to the insurance company without a suit needing to be filed against you.

Additional Living Expenses

If your home has been damaged to such an extent that you cannot live in it, the additional living expenses cover will pay for hotel and restaurant bills; over and above the normal living expenses that you incur till such time your home is livable. There will usually be limits on both the expense and the time but these can be enhanced with additional premiums. If a portion of the house has been rented out, the cover also pays the amount of the rent that you are unable to realize due to the damage incurred. Even if you take advantage of this cover, the insurance company will still pay for rebuilding or repairing your home to the extent of the policy limit.

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