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BASIC COVERAGE GUIDELINES
This 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. Damage caused by a flood, earthquake, or routine wear and tear is not covered. 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, shed or gazebo. These structures are usually 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 additional insurance.
Furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by any insured disaster. Most insurance companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. The best way to determine if you have enough coverage is to conduct a home inventory and determine the value to replace each item.
This part of your policy includes off-premises coverage; meaning that your belongings are covered anywhere in the world, unless you choose not to have 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.
Trees, plants and shrubs are also covered under standard homeowner’s 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.
Expensive items like jewelry, furs and silverware are covered items, but coverage includes limits if they are stolen. Generally speaking, you are covered for $1,000 to $2,000 for all of your jewelry and furs. To insure these items to their full value, you will need to purchase a special personal property endorsement or floater and insure the item for their appraised values. Coverage includes “accidental disappearance,” meaning coverage if you simply lose that item; there is no deductible for these losses.
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.
The liability portion of your policy pays for both the cost of your defense 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.
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. 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 pet.
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. Renting a home or apartment? Ask an agent for information on renter’s insurance.