Both new homebuyers and present homeowners would be at a great disadvantage if they did not gather some form of knowledge or understanding about homeowners insurance. Even landlords on occasion require their tenants to take out this form of coverage as a measure of protection on their investment and to reduce the risk involved in the commercial rental of their property. In any case, it is always a smart approach to have this sort of protection regardless of whether it is required or not. While there are different types of homeowners insurance policies, we introduce you to the type of coverage provided in a standard homeowner insurance policy. Even though this will bring you some way in becoming an educated home insurance consumer, more often than not you will still need to contact your insurance provider directly to obtain information relevant for your own specific, individual policy.
There are six basic types of coverage provided in a standard homeowners insurance policy. Let’s take a closer look at each one and see what they can offer.
This type of coverage protects your home’s structure against any losses that are covered in the insurance policy. Any restrictions contained in your dwelling coverage is usually also an indicator of other limits that may be present in the remainder of the coverage provided under your policy. However, to get the most protection out of this kind of cover you should ensure that your dwelling coverage is sufficient enough to replace your entire home in the event of a complete loss. This can quite easily be done by calculating your home’s square footage and multiplying it by the local building costs per square foot.
Other Structures Coverage
Whereas the previous cover protects just the structure of your home, this type of coverage provides protection for any other structures that are physically joined with your insured property. To discover what the limits are under your other structures coverage all you need to do is calculate it as a percentage of your dwelling coverage. For instance, the average home insurance policy will offer about 10% of the dwelling coverage for the other structures coverage. This means that if, for example, you have $300,000 worth of dwelling coverage, your insurance policy would automatically provide $30,000 in coverage for other structures on your property.
As implied by its name, contents coverage is a form of cover that provides protection against the loss (and sometimes, damage) of your personal belongings, such as electronics, furniture, jewelry, and so on. A standard policy will typically provide up to 50% of your dwelling limits for contents coverage. However, items such as jewelry more often than not will also have their own individual limits. This means that if you have $300,000 worth of dwelling coverage you may have $150,000 worth of contents coverage, though your policy may have an individual limit of $2500 for jewelry. If you require additional coverage for any high value items (for instance, a vintage watch or a rare collector’s item) you would need to schedule an endorsement on your policy to enable specific protection to be provided for those items.
A proactive solution to keeping the contents of your home secure would be to ensure that you have a tight security system set up on the property. An established home security store or company will be of good use in this situation, as they will be able to advise on the type of system best suited to your home. This could include wireless security cameras or even 24-hour home monitoring and protection.
Loss of Use Coverage
In the event your home becomes partly or completely uninhabitable due to a loss covered by your insurance policy, the loss of use coverage will compensate you for any living expenses incurred while you are displaced from your home. This may include hotel expenses, temporary house rental and dining costs. Although loss of use coverage is usually provided at 20% of your dwelling coverage on a standard policy this can be expanded if you are willing to pay more in coverage.
Personal Liability Protection
This helps protect the financial well-being of you and your family in the event that of being involved in a covered lawsuit. Liability limits usually start at $100,000 for a standard policy, however, there is an option to extend this if required.
Medical Payments Coverage
In the event that someone on your property is injured, and no lawsuit is being presented, this coverage helps you pay for medical bills. A standard policy will typically offer $1,000 per person, per incident for a claim. Nevertheless, increased limits can be purchased upon request.
So there you have it! These are the basic types of cover that a standard homeowners insurance policy can provide. As with all insurance policies, homeowners insurance is under-appreciated until it is actually needed, and then it quickly becomes a cherished investment. Getting yourself set up with a comprehensive homeowners policy can go a long way toward making your home a truly comfortable and secure dwelling place.