Homeowners insurance may be the most critical form of financial and personal property coverage because much of your assets may be tied up in your home.
This policy helps make your home and personal belongings financially protected. It offers financial insurance against damages associated with disasters, fraud, and accidents.
Most standard policies include four essential types of coverage: Coverage for the structure of your home, coverage for your personal belongings, liability protection, and coverage for additional living expenses.
Coverage for the Structure of Your Home
Your homeowner’s policy pays for fixing or restoring your home if it is destroyed or damaged by fire, earthquake, hail, lightning, or other disasters specified in the policy.
Some plans also protect detached structures on your property such as a barn, tool shed, or garage – typically about 10 percent of the coverage amount you have on the house’s structure.
A standard policy does not compensate for flood damage, earthquake, or regular wear and tear. Consider this basic rule when buying coverage for your home structure: buy enough coverage to rebuild your house.
Coverage for Your Personal Belongings
Homeowners insurance is not just about helping to mitigate potential harm to your home. It can also provide coverage for the personal belongings that you hold inside.
Coverage of personal belongings includes things stored off-premises – that means you’re covered anywhere in the world. Many companies restrict the amount of cover you have on your property to 10 percent.
Suppose your electronics are stolen from your home, or a fire destroys your furniture, you are protected with personal property insurance. The insurance will help to pay for repairing or replacing property that is covered.
Some insurers are providing flexible coverage that can further help secure your things. For example, you may be able to buy extended coverage for items like jewelry, watches, and furs, which have values above your limits on personal property coverage.
A conventional homeowner’s insurance policy offers coverage if someone gets injured on your property like if a guest falls due to a damaged porch step.
Coverage of bodily injury liability may help pay for the resulting legal expenses or medical bills associated with the visitor if you are found liable.
Liability covers you against lawsuits for bodily injury or property damage caused by you or your family members. It even covers harm that your pet could cause to someone or someone’s property.
By adding a personal umbrella policy, you may be able to boost your liability coverage limits. Your agent can explain to you what options are available.
Additional Living Expenses (ALE)
ALE shoulder the extra costs in situations where you are forced to stay in rental accommodations due to damage to your home because of an insured disaster.
This includes hotel charges, restaurant meals, and other costs incurred when your house is being restored, over and above the reasonable living expenses.
Bear in mind that there are limitations to the ALE scope of your homeowners policy, and specific plans have a time limit. Those limits are separate, though, from the amount available to restore or repair your house.
Your insurance provider will also cover the entire cost of restoring your home up to the policy cap even if you use up your ALE.
When you rent out a part of your home, ALE can also compensate you for the rent you would have received from your renter when your home was not damaged.
With homeowners insurance, you have coverage for the home itself, your personal belongings, as well as living expenses in case you are forced to leave your home due to damage.
It’s always a good idea to get the best coverage you can for your home so you can feel safe no matter what happens.