Standard homeowners insurance

Simple. Your homeowners policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disasters listed in your policy. 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 the house.

Let’s remember that a standard policy will not pay for damage caused by a flood (separate insurance required), earthquake or routine wear and tear.

When purchasing coverage for the structure of your home, remember this simple guideline: Purchase adequate coverage to rebuild your home.

Your Personal belongings (aka Contents) include your furniture, fixture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disasters. The coverage limit is generally 50 to 70 percent of the insurance you have on the structure of the house.

It is always advisable to have updated ‘home content inventory’ to best determine the adequate coverage limit. Many people develop list of inventories (at least of major items/articles), and keep pictures of them in safe place.

Let’s remember that Personal belongings coverage includes items stored off-premises; which mean you have world-wide coverage, even if you travel. Some companies limit the amount to 10-20 percent of the amount of insurance you have for your off-premises possessions. Trees, plants and shrubs are also covered under standard homeowners insurance—generally for about $500 per item. However, trees and plants are not covered for disease, or if they have been poorly maintained. Additional coverages some companies offer are $500 of coverage for unauthorized use of your credit cards, cyber-crime loss etc.

Expensive items like jewelry, furs, art, collectibles and silverware are covered, but there are usually small dollar limits if they are stolen. To insure these items to their full value, purchase a special Personal Article endorsement or floater and insure the item for its officially appraised value(!!)

Liability covers you against lawsuits for bodily injury or property damage that you or family members cause (or allegedly caused) to other people. Let’s remember however, that automobile related liabilities are not covered simply due to separate auto insurance is required for that. It also pays for injury/damage caused by your pets. So, if your son, daughter (or even your dog) accidentally ruins a neighbor’s valuable furniture, you are covered. (Remember however, Liability is for third party compensation; if they destroy your own furniture, you have no coverage.)

The liability portion of your policy pays for both the cost of defense (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 your agent. If you require bigger protection, consider purchasing an Personal Umbrella or Excess Liability policy, which provides broader coverage and higher liability limits.

Your policy also provides no-fault medical coverage, so if a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company. This way, expenses can be paid without a liability claim being filed against you. Again (!) however, it does not pay the medical bills for your own family or your pet.

ALE pays the additional costs of living away from home if you cannot live there due to damage from a 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 homeowners policy has limits—and some policies include a time limitation. However, these limits are separate from the amount available to rebuild or repair your home. Even if you use up your ALE your insurance company will still pay the full cost of rebuilding your home up to the policy limit.

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.

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