Insurance is one type of protection that makes a lot of sense. You need health insurance to cover medical expenses, life insurance to provide for your loved ones when you die, and auto insurance when you buy a car. If you own a house, you also need insurance.
However, not everyone seems clear on the protections that home insurance coverage actually offers. So let’s clarify and explain the 4 areas that home insurance covers:
Your Home Structures
When you have home insurance, the insurance company is supposed to pay to cover the expenses of repairing or rebuilding your home buildings when disaster strikes. This includes the main house, and probably any other structures in your property such as a separate garage, gazebo, or tool shed. However, the coverage for the detached structures won’t be as much as for the main house. It may just be 10% of the coverage for the main house.
You need to check exactly what kind of disaster is covered by the policy so that the repair costs will be covered. Typically, the insurance kicks in when this damage is done by fire and hurricanes, along with lightning and hail. The precise list of disasters may vary from one policy to another. In general, you’re on your own if the damage is caused by an earthquake or flood. The policy also won’t cover the cost of repair when the damage is done by usual wear and tear.
So what kind of coverage do you need? Simple: the coverage should be ample enough to cover the costs of rebuilding your home should it become necessary.
Personal Belongings
The insurance policy also covers all your belongings inside or around your house. These include all your clothes, furniture, electronics, and other personal items inside the house. The policy covers the cost of replacing the items if they’re destroyed or stolen. Again, there’s an official list of covered disasters that’s mentioned in the policy. Usually the list includes theft, hurricane, and fire. The amount of the coverage for these items is about 60% of the amount of the insurance on the house itself.
You may have some expensive items like art, jewelry, fur coats, and collectibles, and the policy may not fully cover the cost of replacing these items if they are stolen. Instead, there’s a dollar limit mentioned in the policy. If you want full value coverage for these items, you may need to take out a separate insurance policy for them.
You may think that you don’t own much in your home, and so you may underestimate the amount of coverage you actually need for your personal items. If you do a full inventory of all your possessions, then you may be surprised at how much money you will need if you ever need to replace all your possessions.
Liability
What if you have guests, and they get hurt during their stay in your home? If you’re found liable for their injuries, you’ll be required to pay for damages to help them pay for their medical treatments. However, with this insurance policy your insurance company pays for court costs and any damages deemed by the court.
Usually, the policy will also contain a no-fault medical coverage. So if a guest does get hurt while they’re inside your home, they can simply just submit their medical bills to your insurance company without having to bother with proving liability on your part.
Other Living Expenses
The damage to your home may leave the house inhospitable while repairs are going on. This means you and your family may have to live in a motel in the meantime. So a part of the motel bill can be covered by the insurance company. The policy may have a limit as to how much you can spend on your temporary living arrangements, and there may be a time limit too.
Hopefully, this primer provides a clearer idea of what home insurance actually offers for your protection.
