Home Insurance: What A Standard Policy Covers
When shopping for home insurance, you need to understand what a standard policy includes.
This article outlines the basics of home insurance and what is typically included in a policy. It will help you review your policy carefully to make sure that you are fully protected in case of an emergency.
Your Home
Home insurance policies cover damage caused by fire, wind, hail, water (excluding flooding), and theft. It can also pay to repair or rebuild your home after an earthquake or other covered disaster.
Speak to your home insurance agent to understand what isn't included in your policy. Also, remember that your home insurance agent will also set a limit for how much they'll pay to repair or replace your home. The limit is usually a percentage of the amount of coverage you have for your home, so keep that in mind as well.
Your Personal Belongings
Standard coverage protects the possessions inside your home, such as furniture, clothing, and electronics. It typically covers damage from fires, windstorms, and even theft. But some items, such as jewelry, furs, and silverware, may have dollar limits on how much the policy will pay to replace them.
So if you want to get full coverage for these items, you should purchase additional coverage like a rider or a floater policy. A floater policy for your jewelry would cover it anywhere in the world, not just inside your home. Rider coverage is an add-on to your home insurance policy that exclusively extends coverage for a specific item.
Liability Protection
Liability home insurance protects you from lawsuits if someone is injured on your property or if you or a family member causes damage to someone else's property.
Home insurance will usually cover medical expenses and damage to property up to your policy limit. For example, say you have a home insurance policy with a $500,000 liability limit. A visitor slips and falls on your wet kitchen floor and sustains injuries that require medical attention. If the visitor decides to sue you, home insurance will pay for their medical expenses and any legal costs or damages up to $500,000.
If the visitor's medical expenses and damages exceed $500,000, you'd have to pay the difference. That's why it's important to understand your policy limit and purchase enough coverage to protect your assets.
Temporary Living Expenses
If your home is uninhabitable due to a covered disaster, this coverage can pay for temporary housing and other necessary living expenses.
For example, if a fire damages your home and you have to live in a hotel while your home is being repaired, temporary living expenses would cover the cost of your hotel stay.
Most home insurance policies will pay a percentage of your home's coverage limit to help cover these expenses. So make sure to speak with your home insurance agent to understand what your limits are.
