Owning a home is a significant milestone, and securing it with the right homeowners insurance is crucial. In 2017, homeowners lodged claims totaling $56 billion, highlighting the indispensable nature of such coverage.
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Homeowners insurance offers protection against numerous risks but isn’t all-encompassing. Here’s a breakdown.
Defining Homeowners Insurance:
Homeowners insurance is designed to shield homeowners against specific unforeseen events. This includes threats like theft and vandalism, with most policies covering both the home’s structure and the personal belongings within.
Coverage Breakdown:
- Structure of the Home:
Standard policies often cover expenses for repairing or rebuilding the home due to damages from events like fires or hurricanes. Most external structures, such as sheds or garages, also fall under this protection. It’s typical for these structures to have coverage amounting to 10% of the main dwelling’s coverage. Landscaping elements, barring those harmed by neglect or disease, are usually covered. - Personal Belongings:
Coverage for personal items, such as clothes or electronics, is often set at up to 70% of the structure’s insurance coverage. This might even extend to belongings stored outside the home. Additionally, some coverage against unauthorized credit card usage may also be included. Note that luxury items might have limited coverage, necessitating additional policies based on appraisals. - Homeowner Liability:
Protection is provided against liabilities arising from injuries or damages caused by homeowners, their families, or pets. This includes scenarios like dog attacks or accidents on the property. Coverage typically addresses legal expenses and settlements up to policy limits. No-fault medical coverage may also be included for injuries sustained on the property, excluding household members. - Additional Living Expenses (ALE):
If a covered event makes your home uninhabitable, ALE coverage handles additional costs like hotel stays. This might also be termed “loss of use” in some policies. The coverage limit for ALE is separate from home repair or rebuilding benefits.
What’s Excluded?
While homeowners insurance covers many risks, certain events like floods or earthquakes might require separate policies. Damage resulting from neglect or usual wear and tear isn’t covered. Some insurers might also limit or charge more for properties with swimming pools, trampolines, or specific dog breeds known for aggressiveness.
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Claiming Homeowners Insurance:
If an incident occurs, reach out to your insurance agent. An adjuster will typically assess the damage. It’s beneficial to have photos and relevant receipts or appraisals at hand.
How Much Coverage Do I Need?
To gauge the right amount of insurance, compile a list of assets requiring protection and create a home inventory with replacement costs. The more assets you have, the more coverage you need. If standard policy coverage seems insufficient, consider an umbrella policy for comprehensive protection. As a guideline, ensure the structure’s coverage can fully rebuild the home in case of total destruction.
