Home insurance can cover a lot of different things depending on the options offered by the company and selected by the homeowner. There are three broad areas that are common to most policies regardless of the home insurance company. These are coverage for property, personal liability, and policy extensions.
Property Coverage: Every home insurance policy provides essentially three types of property coverage including coverage on the home, contents or your personal property, and detached or separate structures.
The coverage on the home is usually referred to as “dwelling” coverage. This is the amount of coverage your home is insured for. It should be enough to replace or rebuild your home as it is today should it be destroyed by a fire or direct hit from a tornado. The amount of coverage will probably be different from your home’s market value and tax value since neither of these numbers have anything to do with your home’s replacement cost.
Contents or personal property coverage applies to everything you moved into your home whether on the first day of possession or 10 years later after you’ve accumulated more or new furniture, appliances, clothing, etc. This number is usually a percentage of the amount of coverage on the home. Depending on the home insurance company, it will range from 40% to 70% of the home’s dwelling value.
Detached or separate structure coverage applies to a variety of permanent structures that are not attached to your home including swimming pools, cabanas, a detached garage, tool or garden shed, green house, fence, etc. The amount of coverage is usually 10% to 20% of the home’s insured value.
Personal Liability: This coverage is designed to protect you financially if someone comes onto your property, invited or not, and is hurt. There are at least two types of coverage which are medical coverage and personal liability coverage. Medical coverage will hopefully take care of a minor injury or visit to a medical clinic. The amount of coverage is usually from $1,000 to $5,000.
If the medical coverage doesn’t resolve the issue, then personal liability coverage applies. This is used if someone sues you for negligence or files a claim against you. The amount of personal liability coverage usually ranges from $100,000 to $500,000 although some companies offer less or more.
Policy Extensions: There are a number of options that can be added to a home policy and these extensions either add additional property coverage (water damage, water backup, slab coverage, scheduled items coverage, etc.), additional liability coverage (animal liability, personal injury, etc.), or coverage to protect you financially (identity theft, credit card fraud, etc.). What options you add are truly up to you.
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