Homeowners insurance is an absolute must-have if you want financial protection from the loss of your home due to disasters, accidents, theft, or break-ins. Here is everything you need to know about the most standard policies and what they cover:
Home Structure Coverage
Even the most basic homeowners policies include home structure coverage that pays to rebuild or repair your home in case of damage due to natural disasters like fire, hail, hurricane, lightning, or any other disasters listed in the policy. Most policies allow 10% of your total insurance amount to cover detached structures such as the tool shed, garage, or gazebo. What most homeowners don’t know is that standard policies don’t provide coverage against routine wear and tear, or damages caused by earthquakes and floods.
Personal Belongings Coverage
Insurance companies allot 50 to 70% of your insurance amount to cover personal belongings like clothes, furniture, sports equipment, and other personal items that may get stolen or destroyed in the event of a hurricane, fire, or other natural disasters.
The best way to determine how much coverage you need is by conducting a home inventory and taking account of all your personal belongings. This coverage also includes any items stored off-premises (you get coverage anywhere in the world). You can also get up to $500 of coverage against unauthorized use of your credit cards.
Liability protection covers you and your family members (and your pets) against bodily injury or property damage lawsuits by other people. The liability coverage portion of your insurance policy also pays for the cost of defending you in court and any court awards (up to a certain predetermined limit)
Liability protection limits usually start at about $100,000, however, you can always speak with your insurance provider and purchase a higher level of protection that fits your needs. If you have significant assets that you need to be protected, you can add on excess liability coverage policies that provide higher liability limits and broader coverage.
Additional living expenses (ALE) Coverage
Additional living expenses coverage pays for any additional costs of living outside your home while it is being repaired or reconstructed due to damage from an insured disaster. This includes money spent on meals outside, hotel bills, and other costs incurred over and above your usual living expenses.