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Coverage for the structure of your home. |
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This part of your
policy 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. It
will not pay for damage caused by a flood, earthquake
or routine wear and tear. 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, tool shed or
gazebo. Generally, these structures are 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 more
insurance. |
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2. |
Coverage for your personal
belongings. |
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Your furniture,
clothes, sports equipment and other personal items are
covered if they are stolen or destroyed by fire,
hurricane or other insured disaster. Most companies
provide coverage for 50% to 70% of the amount of
insurance you have on the structure of your home. So
if you have $100,000 worth of insurance on the
structure of your home, you would have between $50,000
to $70,000 worth of coverage for your belongings. The
best way to determine if this is enough coverage is to
conduct a home inventory.
This part of your policy includes off-premises
coverage. This means that your belongings are covered
anywhere in the world, unless you have decided against
off-premises coverage. Some companies limit the amount
to 10% of the amount of insurance you have for your
possessions.
Expensive items like jewelry, furs and silverware are
covered, but there are usually dollar limits if they
are stolen. Generally, you are covered for between
$1,000 to $2,000 for all of your jewelry and furs. To
insure these items to their full value, purchase a
special personal property endorsement or floater and
insure the item for its appraised value. Coverage
includes “accidental disappearance,” meaning coverage
if you simply lose that item. And there is no
deductible.
Trees, plants and shrubs are also covered under
standard homeowners 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. |
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3. |
Liability protection. |
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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.
So, if your son, daughter or dog accidentally ruins
your neighbor’s expensive rug, you are covered.
However, if they destroy your rug, you are not
covered.
The liability portion of your policy pays for both the
cost of defending you 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.
Generally, umbrella policies cost between $200 to $350
for $1 million of additional liability protection.
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. This way, 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 your pet. |
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4. |
Additional
living expenses in the event you are temporarily
unable to live in your home because of a fire or
other insured disaster. |
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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. If you rent out part of your house,
this coverage also reimburses you for the rent that
you would have collected from your tenant if your home
had not been destroyed. |
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If you
are ever sued, your standard homeowners or auto policy will
provide you with some liability coverage, paying for judgments
against you and your attorney's fees, up to a limit set in the
policy. However, in our litigious society, you may want to
have an extra layer of liability protection. That's what a
personal umbrella liability policy provides.
An umbrella policy kicks in when you reach the limit on the
underlying liability coverage in a homeowners, renters, condo
or auto policy. It will also cover you for things such as
libel and slander.
For about $150 to $300 per year you can buy a $1 million
personal umbrella liability policy. The next million will cost
about $75, and $50 for every million after that.
Because the personal umbrella policy goes into effect after
the underlying coverage is exhausted, there are certain limits
that usually must be met in order to purchase this coverage.
Most insurers will want you to have about $250,000 of
liability insurance on your auto policy and $300,000 of
liability insurance on your homeowners policy before selling
you an umbrella liability policy for $1 million of additional
coverage. |
