A
standard homeowners insurance policy includes four essential types of
coverage. They include:
Coverage for the structure of your home.
Coverage for your personal belongings.
Liability protection.
Additional living expenses in the event you are temporarily unable to
live in your home because of a fire or other insured disaster.
1. The structure of your house
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 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 purchasing more insurance.
2. 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
have up to $500 of coverage for unauthorized use of your credit cards.
Expensive items like jewelry, furs and silverware are covered, but there
are usually dollar limits 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 it's 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 you 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.
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easy-to-use tool:
DOWNLOAD: Free Home Inventory Software
Liability protection
Liability covers you against lawsuits for bodily injury or property
damage that you or family members cause to other people. It also pays
for damage caused by your pets. So, if your son, daughter or dog
accidentally ruins your neighbor’s expensive rug, you are covered.
However, if they destroy your rug, you are not covered.
The liability portion of your policy pays for both the cost of defending
you in court and any court awards—up to the limit of your policy. You
are also covered not just in your home, but anywhere in the world.
Liability limits generally start at about $100,000. However, experts
recommend that you purchase at least $300,000 worth of protection. Some
people feel more comfortable with even more coverage. You can purchase
an umbrella or excess liability policy which provides broader coverage,
including claims against you for libel and slander, as well as higher
liability limits. Generally, umbrella policies cost between $200 to $350
for $1 million of additional liability protection.
Your policy also provides no-fault medical coverage. In the event a
friend or neighbor is injured in your home, he or she can simply submit
medical bills to your insurance company. This way, expenses are paid
without a liability claim being filed against you. You can generally get
$1,000 to $5,000 worth of this coverage. It does not, however, pay the
medical bills for your family or your pet.
Additional living expenses
This pays the additional costs of living away from home if you can't
live there due to damage from a fire, storm or other insured disaster.
It covers hotel bills, restaurant meals and other living expenses
incurred while your home is being rebuilt. Coverage for additional
living expenses differs from company to company. Many policies provide
coverage for about 20% of the insurance on your house. You can increase
this coverage, however, for an additional premium. Some companies sell a
policy that provides an unlimited amount of loss-of-use coverage, but
for a limited amount of time.
If you rent out part of your house, this coverage also reimburses you
for the rent that you would have collected from your tenant if your home
had not been destroyed.
Standard homeowners policies do not cover flooding. You can purchase
flood coverage directly through your homeowners insurance agent.
However, the policy is provided by the Federal Flood Insurance Program (
800-427-4661, http://www.fema.gov/nfip ).
Replacement cost coverage is available for the structure of your home,
but only actual cash value coverage is available for your possessions.
Replacement cost coverage pays to rebuild your home as it was before the
damage. Actual cash value is replacement cost coverage minus
depreciation so that the older your possessions are, the less you will
get if they are damaged. There may also be limits on coverage for
furniture and other belongings stored in your basement.
Flood insurance is available for renters as well as homeowners. You will
need flood insurance if you live in a designated flood zone. But
flooding can also occur in inland areas and away from major rivers.
Consider buying a flood insurance policy if your house could be flooded
by melting snow, an overflowing creek or pond or water running down a
steep hill. Don’t wait for a flood season warning on the evening news to
buy a policy—there is a 30-day waiting period before the coverage takes
effect.
The federal flood insurance program provides only limited coverage. If
you need more coverage than the federal program provides, additional
coverage known as “excess” flood insurance is available from specialized
insurance companies. Depending on the amount of coverage purchased, an
excess flood insurance policy will cover damage above the limits of the
federal program on the same basis as the federal program—replacement
cost for the structure and actual cash value for the contents.
Excess flood insurance is available in all parts of the country—in high
risk flood zones along the coast and close to major rivers as well as in
areas of lower risk—wherever the federal program is available. It can be
purchased from specialized companies such as Lexington Insurance
Company, part of American International Insurance Company, and Lloyd’s
through independent insurance agents, or from regular homeowners
insurance companies that have arrangements with a specialized insurer to
provide coverage to their policyholders
According to the Centers for Disease Control and Prevention, there are
approximately 4.7 million dog bites per year. These bites cost the
property/casualty insurance industry roughly $317.2 million in 2005.
Homeowners and renters insurance policies typically cover dog bite
liability. The following tips can help reduce the chances of your dog
biting someone:
1. Have your dog spayed or neutered. These procedures will greatly
reduce the likelihood that the dog will bite.
2. Socialize your dog so that it knows how to act with other people and
animals.
3. Play non-aggressive games with your dog such as "go fetch." Playing
aggressive games like "tug-of-war" can encourage inappropriate behavior.
4. Avoid exposing your dog to situations in which you are unsure what
the dog’s response will be.
Insurers may charge more
for certain breeds of dogs. The following breeds or types of dog were
responsible for the greatest number of dog bite-related fatalities over
the 20-year period from 1979 to 1998, according to the Centers for
Disease Control and Prevention ( http://www.cdc.gov). The breeds are
listed in declining order of fatalities:
"Pit Bull"
Rottweiler
German Shepherd Dog
"Husky"
Malamute
Doberman Pinscher
Chow Chow
Great Dane
Saint Bernard
Dog owners are liable for
injuries their pets cause if the owner knew the dog had a tendency to
cause that kind of injury; if a state statute makes the owner liable,
whether or not the owner knew the dog had a tendency to cause that kind
of injury; or if the injury was caused by unreasonably carelessness on
the part of the owner.
There are three kinds of law that impose liability on owners:
A dog-bite statute: where the dog owner is automatically liable for any
injury or property damage the dog causes without provocation.
The one-bite rule: where the dog owner is responsible for an injury
caused by a dog if the owner knew the dog was likely to cause that type
of injury – in this case, the victim must prove the owner knew the dog
was dangerous.
Negligence laws: where the dog owner is liable if the injury occurred
because the dog owner was unreasonably careless (negligent) in
controlling the dog.
In most states, dog owners aren't liable to trespassers who are injured
by a dog. A dog owner who is legally responsible for an injury to a
person or property may be responsible for reimbursing the injured person
for medical bills, time off work, pain and suffering and property
damage.
A
standard homeowners insurance policy includes four essential types of
coverage. They include: 
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