Homeowners insurance protects you financially against disasters, theft, and accidents. Coverage for the structure of your home, coverage for your personal items, liability protection, and coverage for additional living expenses are all included in most conventional plans.
Coverage for your home’s structure
If your home is damaged or destroyed by fire, hurricane, hail, lightning, or other disasters mentioned in your policy, your homeowners insurance will pay to repair or rebuild it. A detached structure, such as a garage, tool shed, or gazebo, is usually covered for around 10% of the amount of insurance you have on the house’s construction.
Damage caused by a flood, earthquake, or normal wear and tear is not covered by a typical policy.
Remember this easy rule when acquiring coverage for your home’s structure: Purchase enough insurance to cover the cost of rebuilding your property.
Your personal things are covered.
If your furniture, clothes, sports equipment, and other personal belongings are stolen or destroyed as a result of a fire, hurricane, or other insured disaster, they are covered. The coverage is often 50 to 70% of the insurance you have on your home’s structure.
Conducting a house inventory is the best approach to see if this is enough coverage.
Personal belongings coverage extends to goods kept off-site, ensuring that you are protected no matter where you are in the globe. Some companies cap the amount at 10% of the amount of personal property insurance you have. You’re also covered up to $500 if your credit cards are used without your permission.
Jewelry, furs, art, collectibles, and silverware are typically insured, but there are normally cost limits if they are stolen. Purchase a special personal property endorsement or floater and insure the item for its legally appraised value to fully insure these goods.
Standard homeowners insurance covers trees, plants, and shrubs, usually for about $500 per item. Trees and plants are not protected if they have been diseased or neglected.
Liability insurance protects you from claims resulting from personal harm or property damage caused by you or your family members to others. It also covers any damage your dogs may cause. So you’re covered if your child (or even your dog) accidently destroys a neighbor’s pricey rug. (However, you’re out of luck if they destroy your rug.)
Up to the maximum mentioned in your policy paperwork, the liability element of your policy covers both the expense of defending you in court and any court awards.
Although liability limits often begin at around $100,000, it’s a good idea to talk to your insurance provider about if you should obtain a higher level of protection. Consider obtaining an umbrella or excess liability policy if you have considerable assets and need more coverage than your homeowners policy provides. These policies give broader coverage and greater liability limits.
If a friend or neighbor is harmed in your house, he or she can simply submit medical expenses to your insurance provider. Expenses can be paid this way without risk of a responsibility claim being launched against you. It does not, however, cover your own family’s or pet’s medical expenses.
Additional living expenses (ALE)
Additional living expenses (ALE) pays for the costs of living away from home if you are unable to do so owing to damage caused by an insured disaster. It covers hotel bills, restaurant meals, and other out-of-pocket expenses incurred while your house is being restored, in addition to your regular living expenses.
Keep in mind that your homeowners policy’s ALE coverage has limitations, and some policies have a time limit. These limits, however, are distinct from the funds available to construct or renovate your home. Even if your ALE is depleted, your insurance carrier will cover the whole cost of reconstructing your house up to the policy limit.
If you rent out a portion of your home, ALE will reimburse you for the rent you would have received from your tenant had your home not been destroyed.