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Money Lesson 19 - Home Insurance |
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If you were to suddenly lose your home due to fire or a tornado or have the contents damaged or stolen, like most of us, you probably could not afford to replace everything all at once. All of these situations are covered by the homeowners package policy. While it may be unpleasant to think about fire, theft, and other "uncertainties of life," let's face it, they are there and things happen. Know your home's value Before you choose a policy, it is essential to establish your home's replacement cost. A local builder can provide the best estimate. Homeowners Insurance Coverage The following coverage definitions should help you understand your homeowners policy--but be sure to consult your insurance company representative to assure that you have the right coverage for your needs. Dwelling Coverage The dollar amount carried to cover your home and any structures attached directly to it. Ideally, the amount of coverage you carry should equal the cost of rebuilding your home after a total loss. You need to carry 100% of the best estimated reproduction cost of your home, and a qualified agent will be able to determine that figure. Other Structures Coverage The other structures coverage is usually limited to 10% of the dwelling limit. In most cases, this is more than adequate. However, if you have buildings on your premises of unusual or large design, the 10% limit may not be adequate. Please remember that other structures includes fencing. If you have a coach house or garage apartment and rent them out, the other structures coverage does not apply. The other structures limit can be increased by endorsement. Personal Property Coverage: This coverage provides worldwide coverage for personal property owned or used by the insured. Liability/Coverage: If someone is accidentally injured or dies on or off your property, and it is caused by you, a family member or pet, this coverage pays claims against you for legal responsibility. This coverage must be added to most homeowner's policies for an additional premium. Others Homeowners policies have many other optional features available to you depending on your individual needs. These include earthquake and scheduled personal property coverage. |
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