What Home Insurance Covers
In addition to covering your home, home insurance also protects other property such as furnishings, personal items and other structures on the property including swimming pool and separate garage. Most home insurance policies do not cover losses caused by natural disasters particularly if you are living in a high-risk area. Most home insurance have a personal liability component. For example, if the mailman trips over your child’s skateboard or is clawed by cats your home insurance policy would pay for his medical expenses and other losses up to a predefined limit. Home insurance is expected to cover the following:
- Your home’s structure
- Your personal belongings
- Your liability to others
- Additional living expenses in case your home is damaged and you have to shift elsewhere until completion of repairs
Structure
Home insurance is required to cover rebuilding expenses of your home at current market price. Cost of land however is not included. Rebuilding expenses are not based on current selling price of your home. Most mortgage lenders require buyers to purchase home insurance to protect their property against unanticipated losses. In case the boundary of your home insurance policy is based on mortgage ensure that it can easily cover rebuilding costs. To get a immediate guess of the amount of insurance needed multiply total area your home (in square feet) by local building costs per square foot. Rebuilding costs should be calculated keeping in mind the following considerations; local construction costs, area of the structure, type of exterior wall construction, total number of rooms and bathrooms, type of roof, materials used, number and type of other structures such as garages, sheds, fireplaces, exterior trim and special features as arched windows.
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Mostly home insurance policies reimburse replacement costs as a result of damage. Replacement cost provides for repairs and/or replacement of damaged property with same type of materials and quality. Replacement cost home insurance policy does not require deduction for depreciation.
Personal Belongings
Most home insurance policies cover personal belongings for 50 to 70 percent of the face value of the insurance policy. Take a home inventory to ensure adequacy of this coverage. The inventory taking process would yield a comprehensive list of all you belongings along with replacement cost of these items in case of loss. In case personal belongings cover on your home insurance policy is inadequate contact your insurance agent to purchase a home contents insurance policy.
Additional Living Expenses In Case Of Disaster
An essential feature of home insurance is that it provides additional living expenses in case your home is damaged and you have to shift elsewhere until completion of repairs. Additional living expenditure includes hotel bills or rent, restaurant meals and other living expenditure. Coverage for additional expenses varies from company to company. Most home insurance policies cover additional expenses up to 20 percent of the face value of your policy. Additional expenses coverage also reimburses rent if part of your home is rented out. To determine the amount of coverage you need as well as the time for which it should remain in effect you should consult your insurance agent. You can increase additional insurance coverage on your home insurance by paying higher premiums.
Liability Insurance
In case of lawsuits for bodily injury or property damage against you or your family liability insurance pays liability up to a certain amount. Damage by pets is also covered in liability insurance component of home insurance. It covers both cost of defending in court and damages to be paid in case the case is decided against you.
