To you, it’s just your home, but to an insurance company and their arcane policies, it’s not just a “structure”, but potentially several “structures”, each of which must be assigned the right insurance policy coverage to make sure your home is protected from disaster. And don’t foget your personal possessions are another matter unto themselves!
The rates you pay for your standard homeowners’ insurance policy includes the following essential types of coverage. These are:
1. Coverage for the structure of your home.
2. Coverage for other structures.
3. Coverage for your personal belongings.
1. The Structure of Your House
Coverage for the structure of your house is the part of your policy that includes repairs or rebuilding if your home (dwelling) was damaged by fire, hurricane, hail, lightning or other disasters listed in your policy. Your “dwelling” typically includes your house, attached structures and fixtures in your house such as built-in appliances, plumbing, wiring, heating systems, and permanently installed air-conditioning systems. This coverage does not cover damage caused by floods, earthquakes or routine wear and tear. When you buy your homeowners’ insurance it is very important that you purchase enough to rebuild your home.
2. Coverage for Other Structures
Most standard policies also cover detached structures such as garages, storage sheds, and fixtures attached to the land such as fences, driveways, sidewalks, and retaining walls. These kinds of structures are usually covered for about 10% of the amount of coverage you have on your home. If you believe you need more coverage on these structures, make sure you talk to your insurance agent. If a detached structure is used for a business purpose, it is not covered under a homeowner’s insurance policy.
3. Your Personal Belongings
Items such as furniture, clothing, and sports equipment are covered if they are stolen or destroyed by insured disasters. Some policies may have limited coverage for small boats but not motorized vehicles unless they are unlicensed and only used at your home. Some belongings or items may have limited coverage. These could include artwork, firearms, electronic data and money. Usually you have 50% to 70% of the amount of insurance you have on the structure of your home. It is very important to conduct a home inventory to determine if you have enough coverage to replace these belongings.
Many people learn after a storm or fire that they didn’t have enough coverage to replace their belongings. After a catastrophe, would you be able to remember all the possessions you’ve accumulated over the years? Making an inventory will help you decide on how much coverage you actually need. Start by making a list of your possessions, describe each item and note where you bought it and its make and model. Include all your sales receipts, purchase contracts, and appraisals. For your clothing, make categories and note items that are especially valuable. When it comes to major appliances and electronic equipment, record their serial numbers.
If you are just setting up a household, starting your home inventory can be simple. If you have lived in your home for years, the idea of doing a home inventory can be daunting. Start by going room to room. Note recent purchases and do your best to remember what you can of older items.
Your inventory can be documented by photographing each item or by making a video tape. Make sure to store these documents in a very safe place, not in your home. You can download free home inventory software at www.knowyourstuff.com. Better yet, keep your records and digital photos inside a free KeepandShare account. Read about using KeepandShare for home insurance inventory.
Costly items such as silverware, jewelry, and furs are covered but there are usually dollar limits. Your coverage even includes “accidental disappearance,” meaning if you lose the item it is covered by your policy. However, there is no deductible. To insure expensive belongings for their full limits you need to buy a special personal property endorsement.
Trees, plants and shrubs are also covered under the Personal Belongings part of your policy as long as they were damaged by insurable perils. They are not covered if the damage occurred from wind or disease. The coverage is usually 5% of the insurance on your home.
Your policy also includes off-premise coverage anywhere in the world. Sometimes the limit is 10% of the amount on the policy.
Your policy should include up to $500.00 of coverage for unauthorized use of your credit cards.
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