Why do you need homeowners insurance? What if your home were destroyed in a storm, where would you go?  How would you replace your home, clothing, furniture? A homeowner’s policy will provide coverage on your dwelling (home), and personal property along with offer liability insurance if anyone were to be injured on your property or cause property damage.  If you have a loan on your home your lender will require you to have insurance; they want to make sure that their financial investment is protected.

Your home policy will not cover Earthquakes or Floods.  You must purchase a separate policy or endorse these coverages to your policy.  Your homeowner’s policy also does not cover normal wear and tear. Don’t think of your homeowner’s policy as a maintenance policy.  It is your responsibility, as the property owner, to keep your property up to date and safe.

Deductible is the amount you pay out of pocket for a loss.  A higher deductible can lower your premium, but when you have a loss you will have to pay the higher deductible. 

Dwelling amount is the cost to rebuild your home in the event of a total loss. This includes, debris removal, building materials and labor.   This amount is not the value of your home or what the insurance company thinks it will sell for. 

Other structures will cover detached structures such as a fence, garage, shed or gazebo.  This amount is usually about 10 percent of your dwelling amount but can be increased if you feel you need more coverage.

Personal Property covers all of your personal effects.  For example, furniture, housewares, sporting equipment, and clothing.  This amount is usually 50 to 70 percent of your dwelling amount.  We highly suggest you take an inventory of your items, this will make it easier on you if you have a loss. I have provided a form to help you create your inventory.  For expensive items like jewelry, art, collectibles are covered. But to insure these items are insured to their full value you will want to add a Personal Property Endorsement or Floater to your policy. 

Additional Living Expenses also known as Loss of use helps when you are displaced from your home because it is no longer livable due to a covered loss.  This coverage will provide reimbursement for hotel bills, and meals while you are displaced.

Liability will help cover you to prevent lawsuits for bodily injury or property damage that you or someone in your family cause. This also will cover damage caused by your pets. (As long as they are not excluded or on a restricted list.)

Medical Payments will provide coverage if a guest is injured at your home, whether you are to blame or not.

 There are also endorsements that are very important to a homeowner policy.  Below are a few that our agency always suggests!

Water Back-Up is an endorsement every home, condo and renters policy should have.  This will provide coverage in the event of a loss caused by water that backs up through, or overflows from a sewer, drain, sump, or any system on the property designed to remove water from the foundation area. This coverage does not cover flood! You must purchase a flood policy for that coverage.

Identity Recovery provides coverage for expenses incurred to assist a customer while recovering identity after a covered ID theft.

Scheduled Personal Property will provide additional coverage to specific items such as jewelry, furs and collectibles.  An appraisal or bill of sale may be required when adding an item to your policy.

Special Personal Property endorsement provides additional coverage to Scheduled Personal Property for all losses including mysterious disappearance. 

Replacement Cost Personal Property ensures that when there is a covered loss your items will be replaced without depreciation due to age or use.

Service Line Coverage is not available with every company so check to see if it is available with yours.  This provides coverage for underground pipes or wiring coming into the insured property.  This will help cover the costs of repairing the damaged service lines and pipes if you are legally responsible to repair them.

Equipment Breakdown covers multiple appliances in the event of an unexpected mechanical or electrical breakdown.  This does not cover normal wear and tear or corrosion.

Each company has its own special endorsements and policy tiers.  Some of these may bundle several endorsements into a special package.  Talk to your agent to see what level of coverage is right for you.

Click here for your Home Inventory List.pdf

Sources:

https://www.iii.org/article/homeowners-insurance-basics

https://www.safeco.com/blog/understanding-homeowners-insurance