Multiple factors determine how much and what type of coverage your home's insurance policy should provide. Your policy will consist of two main segments - your liability coverage and your property protection. Liability coverage is relatively simple, and covers the expenses related to injuries another person incurs as a result of an accident on your property. It also protects from lawsuits related to such accidents. For example, if your dog bites a door-to-door salesperson, your homeowner's liability insurance should cover the damages. The amount of liability coverage you should purchase depends on your personal preferences, as well as your habits regarding visitors. If you regularly host parties or have the neighborhood kids over to swim in your backyard pool, you'll want to purchase adequate liability coverage.
Property protection is more complex. It covers two types of property - your structure and your belongings. Your home's structure coverage includes your dwelling, it's permanently installed appliances, electrical systems, plumbing systems, water coolers, heating systems, central air conditioning systems and any detached structures, such as carports or storage buildings. Your belongings, on the other hand, consist of your personal furnishings, clothing, jewelry, furs, cash, weapons, electronics and other personal possessions.
When you purchase property protection, you have the choice of insuring your structure and belongings according to the replacement value or the market value. If you choose replacement value, your insurer will provide you with enough coverage to replace all of your losses due to a qualified event up to your coverage amount. Replacement value is typically preferable over market value, as choosing the latter means your insurer will only provide you with enough recompense to cover your structure's and your belongings' reasonable sale price to a willing buyer. Belongings typically depreciate over time, and if you lose your home during a poor housing market, this could mean you won't have enough money to rebuild your home and replace your personal effects.
Finally, examine the special needs of your property. Do you live in a flood zone? If so, you'll need to purchase flood insurance, as homeowner's insurance does not cover flood damages. Do you expect your home's value to increase considerably in coming years? Maybe you should consider inflation guard for your policy, which increases your coverage amount regularly to keep up with inflation. The additional coverage adds little cost to your homeowner's insurance premiums, but could save you thousands of dollars in the future.
What is Recommended to do in Order to Protect my Assets if I am Sued?
If you are being sued due to an auto accident or an accident that takes place in your home, then it is important to know what you need to protect your assets. By taking action to keep your personal...
Read More →
Insurance Coverage for Renters With Negligent Landlords
As a young, inexperienced renter, you may think that your landlord has a home insurance policy that will protect you, and that that coverage will pay the cost to repair any damage to your property....
Read More →
Homeowners 101: What are the Main Factors of Home Insurance?
When you are looking for homeowners insurance to protect your new house, it is important to understand the factors that are covered by a basic policy. Although coverage will vary between companies,...
Read More →