A standard Homeowners’ insurance policy includes four essential types of coverage. They include:
Coverage for the structure of your home
This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning, or other disaster listed in your policy. It will not pay for damage caused by a flood, earthquake, or routine wear and tear. When purchasing coverage for the structure of your home, it is important to buy enough to fully rebuild your home.
Most standard policies also cover structures that are detached from your home such as a garage, tool shed, or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home. If you need more coverage, talk to your insurance agent about increasing your coverage or purchasing an Umbrella policy.
Coverage for your personal belongings
Your furniture, clothes, sports equipment, and other personal items are covered if they are stolen or destroyed by fire, hurricane, or other insured disaster. Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. So, if you have $100,000 worth of insurance on the structure of your home, you would have between $50,000 to $70,000 worth of coverage for your belongings. The best way to determine if this is enough coverage is to conduct a home inventory.
This part of your policy includes off-premises coverage. This means that your belongings are covered anywhere in the world, unless you have decided against off-premises coverage. Some companies limit the amount to 10% of the amount of insurance you have for your possessions. You also have up to $500 of coverage for unauthorized use of your credit cards.
Expensive items such as jewelry, furs, and silverware are covered, but there are usually limitations if they are stolen. Generally, you are covered for between $1,000 to $2,000 for all of your jewelry and furs. To insure these items to their full value, purchase a special Personal Property endorsement, or floater, and insure the item for its appraised value. Coverage includes “accidental disappearance,” meaning coverage if you simply lose that item, and there is no deductible.
Trees, plants, and shrubs are also covered under standard Homeowners’ insurance. Generally, these items are covered for 5% of the insurance on the house – up to about $500 per item. Perils covered are theft, fire, lightning, explosion, vandalism, riot, and even falling aircraft. They are not covered for damage by wind or disease.