Insurance World

A typical homeowners insurance policy has four key ingredients. They are:

1. Homeowner insurance coverage for your home itself
2. Homeowner insurance coverage for your family’s personal items
3. Homeowner liability coverage
4. Coverage for the expenses of temporary living should you have to vacate your home because of fire, flood or other disaster covered by your homeowner policy.

The portion of the homeowner coverage for your home itself provides funds for the repair or reconstruction of your home if it has been damaged or destroyed by disaster such as hurricane, hail, lightning, fire or any other covered event. What is not covered with a standard homeowner policy is normal wear and tear on your home or damage caused by an earthquake or flood. (There are homeowner policies that cover these, but they are more costly and in some regions, such as flood prone areas they are not available at all.)

When you take our your homeowner policy you’ll want to be sure and buy enough coverage for total reconstruction of your home

Most standard homeowner policies also protect structures on your property although detached from your home, such as in-law quarters, garage or gazebo. It’s common practice to cover these unattached structures for ten percent of the covered value of your house.

Should any of your clothing, electronic equipment, furnishings, or other personal belongings be destroyed by insured disaster, or stolen, they are covered by your homeowner policy. Most carriers cover them at the rate of 50-70 percent of the total dollar figure of your home structure’s coverage.

There is also a clause in your homeowner policy for coverage of off-premises items. Which means that if you take your personal belongings elsewhere and they become lost or damaged your homeowner policy will generally reimburse you at least ten percent of the amount of coverage that you have on them when they are on your home premises. Homeowner policies also provide up to $500 of protection against unauthorized credit card use as well.

For high priced items like jewelry and fur a standard homeowner policy will usually limit your coverage to $100-$2000. You can purchase coverage up to appraised value for an additional charge. In either case there is no deductible and coverage includes your accidental loss of the items.

Foliage around your home such as trees and shrubs also come under the protection of your homeowner policy. Usually the money figure is five percent of the home’s insured value, but up to $500 for each bloom. They are protected against even riots, vandalism, explosion and airplane crashes. They are not insured against wind or disease damage.

Liability coverage protects you against litigation should anyone or anything become injured on your premises. You are also covered for damage done by your children or pets to the property of others as well. This coverage is in force even if you are not in your own home or on your own property. It covers any court defense as well as any court appointed financial award against you. The coverage limit is generally more than $100,000, although a $300,000 minimum is a standard recommendation.

Your homeowner policy also takes care of living expenses if you temporarily have to vacate your home because of damage and during repair and reconstruction of your home. Coverage includes hotel costs, meals in restaurants and other common expenses. Coverage limit of 20 percent of your home’s insured value is common for this. If part of your home served as rental property your homeowner policy will also reimburse you the amount of the rent that you are losing because of the disaster.

The best homeowner insurance is the insurance that best meets your needs. The insurance shopper that takes the time to understand the basic elements of home insurance will have much more confidence and sense of satisfaction when making an insurance purchase. The homeowner policy has been around for a long time and so most of us have a general concept on how the policy works. The more you know about the market value of your home and the approximate cost to rebuild it the better off you will be when shopping for the homeowner policy.

This kind of knowledge is the foundation for determining what kind of policy to purchase. The age of your home has a direct bearing on the market value. The older homes built in the 1900’s have much lower market values today because most of them have depreciated. The market value for an older Victorian style home may be $50,000 but the actual cost to rebuild that home may be $200,000. The older homes that depreciate in market value are insured with actual cash value policies. They are often called market value policies. These policies will reimburse you for the market value of your home when there is a total loss. The market value policy is the best homeowner policy for the older home that has depreciated.

The replacement cost policy is better designed for newer homes or homes under construction. The replacement cost of a home and the market value are almost the same. Replacement cost is applied to the dwelling and most often to the contents of the dwelling. Replacement cost will repair or replace any loss with like kind and quality of materials without depreciation.

The best homeowner insurance for you will be determined by the age and market value of your home. The discounts for older and newer homes are the same. The protective device discount for deadbolt locks, smoke detectors, and fire extinguisher apply to both types of policies. Fire and burglar alarm systems are additional discounts that could be applied to both older and newer homes. Check our recommended insurers for more details.