Most standard home insurance policies include four main types of coverage:
- Insurance coverage on the structure of your house
- Insurance coverage for your personal belongings
- Liability protection
- Additional living expenses if you are temporarily unable to live in your house because of an insured disaster
The Structure of Your House
Your home insurance policy pays to either rebuild or repair your house if it is damaged or destroyed by fire, hail, hurricane, lightning or other disasters you are covered for which will be listed in your policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. Flood and earthquake insurance normally require an additional type of policy. When purchasing coverage for the structure of your home, follow this rule of thumb – purchase enough coverage to rebuild your home.
Most policies also cover detached structures such as a garage, tool shed or gazebo—generally for about 10 percent of the amount of insurance you have on the structure of your home.
Your Personal Belongings
The coverage on your personal items is generally 50 to 70 percent of the insurance on the structure of your house.
Your furniture, electronics, clothes and other personal items are covered if they are stolen or destroyed by fire or other insured disasters. Do a home inventory of your personal items to make sure you have enough coverage.
Expensive items like jewelry, furs, art, collectibles and silverware are covered, but there are usually dollar limits on each of these items if they are stolen. To ensure that you are insured for the full official appraised value for these items, purchase a special personal property endorsement or floater.
Trees, plants and shrubs are also covered under standard home insurance policy, generally for about $500 per item. Trees and plants are not covered for damage by wind or disease.
Liability covers you against lawsuits for property damage or bodily injury that you or family members cause to other people. It will also pay for damage caused by your pets. So, if a family member or your dog accidentally ruins a neighbor’s expensive rug, you are covered. (However, if they destroy your rug, your insurance will not cover it.)
The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit stated in your policy documents.
Liability limits generally start at about $100,000, however, it’s a good idea to discuss whether you should purchase a higher level of protection with one of our insurance professionals. If you have significant assets and want more coverage than is available under your homeowners policy, consider purchasing 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, so if a friend or neighbor is injured on your property, he or she can simply submit medical bills to your insurance company. This way, expenses are paid without a liability claim being filed against you. It does not, however, pay the medical bills for your own family or your pet.
Additional living expenses (ALE)
ALE pays the additional costs of living away from home in the event that you cannot live there due to damage from an insured disaster. It covers hotel bills, restaurant meals and other costs, over and above your usual living expenses, incurred while your home is being rebuilt.
Keep in mind that the ALE coverage in your home insurance policy has limits—and some policies include a time limitation. However, for an additional premium, you can generally increase the amount of ALE coverage.
Your ALE coverage limit is separate from the amount available to rebuild or repair your house. Your insurance company will still pay the full cost of rebuilding your home up to the policy limit even if you use up your ALE.
If you rent out part of your house, ALE also covers you for the rent that you would have collected from your tenant if your home had not been destroyed.
Have questions concerning your current home insurance policy? Give us a call today!