- What it covers: A homeowners insurance policy will cover damage to your property and your personal property in the event of certain storms, fire, theft or vandalism. Provides liability coverage if someone is injured on your property and decides to sue. It will also provide coverage in the event you need to rent a hotel if you are temporarily displaced from your home due to a covered loss. It can also protect your personal belongings outside of your home too. If your car is broken into and your personal items were taken, your homeowners insurance will most likely provide coverage. Most homeowner’s policies will cover your belongings when you are traveling as well.
- What is does not cover: Earth movements such as, earthquakes, landslides, sinkholes, power failure, war, nuclear hazard, government action, faulty zoning, bad repair or workmanship, defective maintenance and flooding. In some high risk areas, windstorms damage such as tornadoes or hurricanes will be excluded.
- Water damage can be confusing; as a rule, water from above, such as rainwater, burst pipe in an upstairs floor is normally covered however, water from below such as backed-up sewer or ground flooding generally is not. If you live in an area prone to earthquakes or floods you should consider supplement coverage.
- Get Replacement Cost Value: You want to be able to replace everything you lost with similar new items. Make sure your policy spells out that both your home and its contents are covered by replacement-value insurance. Look for extended or guaranteed-replacement-value coverage. This will cover rebuilding no matter what the cost.
- Understand the claims process: Insurance companies are vastly different when it comes to making you whole again after a loss. Know the timetable on replacing and how and when claims are paid.
- Take inventory: Take photos or video of your home, walking through each room. Don’t forget storage areas also. Keep the photos or video in a safe place, one for your home and another in a fireproof safe or safety deposit box.
- Buy Floaters: Typically your homeowner’s policy limits the amount they will pay in high-valued items, things like computer equipment, jewelry, furs, collectibles, sound equipment, etc. You may want to consider purchasing a special “floater” policy.
- Purchase Inflation Guard protection: This will cover the increasing cost of rebuilding to meet the current cost to replace your home. When making improvements to your home, this is an important factor to consider and your policy needs to be updated.
- Consider Flood and Earthquake Insurance: Maybe not everyone needs it, however if you live in an area prone to floods or earthquakes these are highly recommended.
- Think about purchasing an Umbrella Policy: Your Liability coverage will payout if someone sues you however, most lawsuits will be in the millions. If you have assets, purchase an umbrella policy which will add the extra liability coverage to your home and auto policies. These are relatively cheap, normally around $ 200 – $ 400.00 per year.
