Home owner’s insurance is designed to give you financial protection should disasters happen to your home. A standard home owner’s insurance policy will insure your house and the possessions you have inside it.
Generally, home owner’s insurance comes as a package. In other words, it covers damage not only to your property, but also any liability you may have for property damage or injuries that you or your family members cause to happen to others. This includes anything that your pets might do.
As a rule, damage that is a result of most disasters is covered by your home owner’s insurance, but there are exceptions. Earthquakes, floods, and poor maintenance are three of the most common examples. If you want insurance against floods or earthquakes, you will need to purchase separate policies. If you do not want to have maintenance problems, then you will need to take excellent care of your home.
A standard home owner’s insurance policy will have four kinds of coverage. These kinds are: coverage for your home’s structure; protection against personal liability; coverage for your possessions; living expenses in case a disaster makes your home uninhabitable.
The first kind pays for all costs associated with rebuilding or repairing your home if fire, hurricane, hail, lightning, or another covered disaster destroys your home. As mentioned above, it will not generally cover damage from floods or earthquakes. You will need to buy enough insurance so that, if you need to rebuild your home, you will have enough money to do so.
As a rule, home owner’s insurance also covers detached structures, like a gazebo, shed, or garage. The coverage for these structures is usually set at 10% of the amount of insurance you bought for your home’s structure.
The second kind pays for anything that you, your family members, or your pets cause in the way of property or personal damage to others.
The third kind pays for all of your belongings that get destroyed in an insured disaster. This includes clothes, furnishings, sporting goods, and other personal items. The general rule is that companies will give you coverage for 50-70% of whatever insurance you bought for your home’s structure. If you purchased $200,000 worth of home insurance, there would be between $100,000 and $140,000 of coverage for your possessions. Is this enough? Go around your house and add up the replacement value of your possessions.
The fourth kind pays for any lodging bills you would have as a result of having to move out of your home while it is being repaired or rebuilt after an insured disaster.